Growth Slows for Nestlé in Q2 as Consumer Stockpiling Subsides

Nestlé has reported organic sales growth of 1.3% in its second quarter results, after strong consumer stockpiling in March was followed by weaker demand in Q2. The Swiss food giant cut its full-year forecast to 2-3% growth in organic sales, from “more than 3.5%” previously. For its first half, the company’s total reported sales stood at CHF 41.2 billion ($45 billion approx.), representing a 9.5% year-over-year decrease, with results impacted by the divestment of its Skin Health and US ice cream business last year. Nestlé saw sustained momentum in the Americas during its first half, with organic growth of 5.3% for its largest unit, Zone Americas. In North America, beverages including Starbucks at-home products, Nescafé and Coffee-Mate grew at double-digit rates, with frozen food performing at a similar level, while baking products saw ‘exceptional demand’. Nestlé’s Europe, Middle East and North Africa (EMENA) unit recorded 2.4% organic growth in the company’s half-year results, with an ‘exceptionally strong’ start to the year offsetting declines in Q2. According to Nestlé, the comparably poor performance of this unit in the second quarter was due to a sharp sales decline in the out-of-home channel, particularly for water and Nestlé Professional. In the first half, organic growth was down 2.2% year-over-year for Nestlé’s Zone Asia, Oceania and sub-Saharan Africa (AOA) unit as a double-digit decline in China outweighed moderate growth in other regions. According to Nestlé, sales in China recovered after the coronavirus-related hit in Q1 and growth was almost flat in the second quarter, which helped to return the Zone overall to positive growth in Q2. “Nestlé has remained resilient in a rapidly changing environment, delivering solid organic growth and improved margins in the first half,” said Nestlé in a statement signed by CEO Mark Schneider and chairman of the board Paul Bulcke. “These results demonstrate the agility of our business and the strength of our diversified portfolio across geographies, product categories and channels. “With consumer behaviour evolving faster than ever, we are adapting to this new reality by strengthening our innovation, leveraging our digital capabilities and executing with speed.”