Nestle outshines peers thanks to pet food, health products

Nestle wants to boost organic sales growth towards a mid-single-digit rate this year, the food giant said on Thursday, after strong demand for pet food and health products in the Americas helped its growth outshine peers last year.

Consumers have kept buying packaged food throughout the pandemic and Nestle has fared better than some rivals by shedding underperforming businesses and investing in growth areas such as plant-based food, coffee and health science.

"We're seeing continued improvement in organic growth for the third year in a row now," CEO Mark Schneider told reporters on a call.

"There's a possibility to cross over the 4% point (this year), which would be great, but in light of the uncertainties it's hard to commit to that right now."

He said the Swiss group wanted to achieve sustained mid-single-digit growth in the medium term and also expected to keep doing acquisitions.

Full-year organic sales, which strip out currency effects, acquisitions and divestitures, grew 3.6% in 2020, ahead of Nestle's own guidance of "around 3%" and peer Unilever's 1.9% underlying sales growth.

France's Danone is due to post 2020 results on Feb. 19 with analysts expecting negative like-for-like growth.

Analysts in a consensus compiled by Nestle were looking for 3.5% organic sales growth for the full year.

Net profit fell 3% to 12.2 billion Swiss francs ($13.58 billion), beating expectations for 11.97 billion francs. The year-ago period had benefited from a one-off gain linked to the sale of its skin health business.

The underlying operating margin improved to 17.7% last year, after reaching 17.6% and thus the group's mid-term profitability target range of 17.5-18.5% in 2019, a year earlier than planned.

Nestle proposed hiking its dividend 5 cents to 2.75 francs per share for 2020, its 26th consecutive increase. It also has a share buyback programme under way.

Shares in Nestle, down almost 4% this year, were indicated to open 1.1% lower.