Press Release: Nestle: Nestlé reports half-year -3-

Zone Greater China

-- 1.6% organic growth: 2.9% RIG; -1.3% pricing.

-- The underlying trading operating profit margin decreased by 80 basis

points to 15.8%.

Sales Sales Organic UTOP UTOP Margin Margin

6M-2024 6M-2023 RIG Pricing growth 6M-2024 6M-2023 6M-2024 6M-2023

Zone

Greater CHF 2.4 CHF 2.5 CHF 0.4 CHF 0.4

China bn bn 2.9% - 1.3% 1.6% bn bn 15.8% 16.6%

Organic growth was 1.6%. RIG was 2.9%, increasing to 3.8% in the second quarter, driven by continued momentum for out-of-home and e-commerce channels. Pricing was -1.3%, impacted by low single-digit deflation in the food & beverage industry. Foreign exchange had a negative impact of -6.1%. Reported sales in Zone Greater China decreased by -4.2% to CHF 2.4 billion. The Zone drove market share gains in soluble coffee, pet food, confectionery and infant nutrition, with losses in culinary.

By product category, coffee achieved high single-digit growth, led by Nescafé ready-to-drink offerings and supported by new product launches with functional benefits. Nestlé Professional delivered high single-digit growth, fueled by continued innovation and customer acquisition. Sales of confectionery grew at a high single-digit rate, driven by Shark Wafer, Hsu Fu Chi and KitKat. Purina PetCare achieved double-digit growth, building on new product launches and strong e-commerce momentum for Purina Pro Plan. Culinary reported flat growth, with strong contributions from out-of-home and e-commerce channels. Infant Nutrition delivered negative growth, outperforming a category decline. Dairy posted negative growth, reflecting a market slowdown in dairy-based categories.

The Zone's underlying trading operating profit margin decreased by 80 basis points, following increased growth investments in advertising and marketing.

Nestlé Health Science

-- 0.1% organic growth: -0.2% RIG; 0.4% pricing.

-- The underlying trading operating profit margin increased by 40 basis

points to 13.4%.

Sales Sales Organic UTOP UTOP Margin Margin

6M-2024 6M-2023 RIG Pricing growth 6M-2024 6M-2023 6M-2024 6M-2023

Nestlé

Health CHF 3.2 CHF 3.3 CHF 0.4 CHF 0.4

Science bn bn - 0.2% 0.4% 0.1% bn bn 13.4% 13.0%

Organic growth was 0.1%. RIG was -0.2%, improving to 3.0% in the second quarter. Pricing was 0.4%. Net acquisitions increased sales by 0.4%. Foreign exchange negatively impacted sales by -3.0%. Reported sales in Nestlé Health Science decreased by -2.4% to CHF 3.2 billion. By geography, Europe delivered high single-digit growth, while other regions combined saw slightly negative growth.

Vitamins, minerals and supplements posted negative growth, reflecting the impact of supply constraints encountered in the second half of 2023. The recovery plan is on track and the business is starting to retake market share. Active nutrition saw low single-digit growth, with strong sales contribution from Orgain offsetting negative growth for Boost. Medical Nutrition delivered high single-digit growth, with continued market share gains. Growth was driven by strong sales momentum for adult medical care products and Vitaflo. Sales for gastrointestinal products continued to grow at a double-digit rate.

The underlying trading operating profit margin of Nestlé Health Science increased by 40 basis points, driven by portfolio optimization and cost efficiencies.

Nespresso

-- 1.8% organic growth: 1.1% RIG; 0.7% pricing.

-- The underlying trading operating profit margin decreased by 20 basis

points to 21.5%.

Sales Sales Organic UTOP UTOP Margin Margin

6M-2024 6M-2023 RIG Pricing growth 6M-2024 6M-2023 6M-2024 6M-2023

CHF 3.1 CHF 3.1 CHF 0.7 CHF 0.7

Nespresso bn bn 1.1% 0.7% 1.8% bn bn 21.5% 21.7%

Organic growth was 1.8%. RIG was 1.1%, improving to 2.4% in the second quarter. Pricing was 0.7%. Foreign exchange negatively impacted sales by -2.9%. Reported sales in Nespresso decreased by -1.0% to CHF 3.1 billion. By geography, sales in North America grew at a mid single-digit rate with market share gains. Europe posted close to flat growth.

Growth was driven by the Vertuo system, with continued broad-based sales momentum. New product launches, including the expansion of compostable capsules in seven European markets, supported growth. Out-of-home channels continued to generate robust growth, fueled by the further adoption of the Momento system.

The underlying trading operating profit margin of Nespresso decreased by 20 basis points, following increased advertising and marketing investments to drive future growth.

Business as a force for good: Cocoa-farming families of Nestlé's income accelerator are seeing higher yields and incomes

Launched just two years ago, Nestlé's income accelerator is already making a difference in addressing the challenges facing cocoa-farming families. In the first 18 months of the program's test at scale, cocoa yields of participating farmers increased by 32% after adopting the high-quality pruning practices learned through the program. Their household income also rose by 38%. This is according to a report published by the KIT Institute, an independent center of expertise and education for sustainable development.

The KIT study, which was based on a sample of 1 500 income accelerator households, found that participating households had a higher rate of school enrollments than non-participating households. It confirmed that the program is helping to effectively mitigate diseases and pests on farms, facilitating income diversification, promoting financial access and empowering women.

The goal of Nestlé's income accelerator is to help close the living income gap of cocoa-farming families and to reduce the risk of child labor. The program rewards participating households for enrolling children in school; implementing good agricultural practices, like pruning; taking up regenerative agriculture activities, such as agroforestry; and diversifying their household income.

Nestlé introduced the first-ever KitKat bars made with cocoa grown by income accelerator farming families earlier this year. These KitKat bars aim to raise consumers' awareness about the sustainability of the cocoa used in the iconic bars and build consumer trust, as they showcase the traceability of Nestlé's cocoa. Consumer research shows that these efforts can help build brand loyalty and engagement(1).

Nestlé's income accelerator has so far supported more than 10 000 families in Côte d'Ivoire. It is expanding to Ghana in 2024 to include a total of 30 000 families. By 2030, the program aims to reach an estimated 160 000 cocoa-farming families in Nestlé's cocoa supply chain.

(1) Nestlé Sustainability Pillars Research

Outlook

Full-year 2024 outlook updated: we expect organic sales growth of at least 3%. Underlying earnings per share in constant currency is expected to increase at a mid single-digit rate. Underlying trading operating profit margin guidance unchanged with a moderate increase expected.

Annex

Half-year sales and underlying trading operating profit (UTOP) overview by operating segment

Zone Zone Zone Nestlé

Total North Zone Zone Latin Greater Health Other

Group America Europe AOA America China Science Nespresso Businesses

Sales

6M-2024

(CHF m) 45 045 12 234 9 283 8 441 6 166 2 440 3 239 3 096 146

Sales

6M-2023

(CHF m) 46 293 12 553 9 467 9 060 6 082 2 548 3 318 3 128 137

Real

internal

growth

(RIG) 0.1% - 1.5% 1.3% 0.0% 0.1% 2.9% - 0.2% 1.1% 8.4%

Pricing 2.0% 1.4% 3.1% 3.5% 2.5% - 1.3% 0.4% 0.7% 1.4%

Organic

growth 2.1% - 0.1% 4.5% 3.5% 2.7% 1.6% 0.1% 1.8% 9.7%

Net M&A - 0.4% 0.0% - 2.7% 0.0% - 0.1% 0.2% 0.4% 0.1% 0.0%

Foreign

exchange - 4.4% - 2.5% - 3.7% - 10.3% - 1.1% - 6.1% - 3.0% - 2.9% - 3.9%

Reported

sales

growth - 2.7% - 2.5% - 1.9% - 6.8% 1.4% - 4.2% - 2.4% - 1.0% 6.0%

6M-2024

Underlying

TOP (CHF

m) 7 841 2 662 1 644 2 006 1 219 386 433 667 - 5

6M-2023

Underlying

TOP (CHF

m) 7 904 2 713 1 570 2 068 1 202 422 432 678 - 17

6M-2024

Underlying

TOP

Margin 17.4% 21.8% 17.7% 23.8% 19.8% 15.8% 13.4% 21.5% - 2.9%

6M-2023

Underlying

TOP

Margin 17.1% 21.6% 16.6% 22.8% 19.8% 16.6% 13.0% 21.7% - 12.5%

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July 25, 2024 01:00 ET (05:00 GMT)