Zurich (AFP) – Swiss food giant Nestle reported better-than-expected annual sales on Thursday, boosting its shares after the maker of Nescafe coffee, KitKat chocolate, and Purina dog food hiked prices to offset inflation. Shares in the group, whose myriad products also include Maggi bouillon cubes, Gerber baby food, and Nesquik chocolate-flavored drink, soared around six percent in Zurich after it published its 2024 results.
“In a challenging macroeconomic context and soft consumer environment, we achieved a solid performance in 2024 in line with our latest guidance,” chief executive Laurent Freixe said in a statement. The company’s share price slumped by nearly a quarter last year, raising concerns in Switzerland as pension funds invest heavily in Nestle. Freixe took over in September in a surprise change at the top of the Swiss group, which had faced flagging sales and scandals surrounding its bottled waters.
A company veteran who headed the Latin America division before his promotion, Freixe has made it a priority to boost growth at a company whose products range from frozen foods to sweets to health care nutrition. Consumers turned to cheaper products as Nestle raised prices to cope with inflation. The group has also faced scandals in Switzerland and France over the use of banned filtering systems for its mineral waters and the deaths of two children who had consumed Buitoni pizzas suspected of being contaminated with E.coli.
A French judge has decided to open probes on two complaints by NGO Foodwatch regarding the mineral water treatment by Nestle and Sources Alma. Freixe said in a call with analysts that “many options” are on the table for the water business but “we exclude an outright sale.” “We look for partnerships that will help us to enhance and grow that business forward. We are absolutely committed to our brands,” he said, adding that Nestle’s water business has “unique jewels.”
– ‘Moving in the right direction’ –
Nestle said its real internal growth (RIG) — a measure of sales volume excluding the impact of price hikes and acquisitions or divestitures — reached 0.8 percent in 2024 after picking up steam at 1.4 percent in the second half of the year. It had fallen 0.3 percent in 2023. “Although the environment remains very challenging, we believe that the FY24 (fiscal year 2024) results mark a new beginning,” Jean-Philippe Bertschy, analyst at investment firm Vontobel, said in a note.
Nestle said sales revenue fell 1.8 percent to 91.3 billion Swiss francs ($100.2 billion) — higher than the 91 billion francs forecast by analysts surveyed by Swiss financial news agency AWP. Its profit after tax was down 2.9 percent to 10.9 billion francs, lower than the 11 billion francs estimated by analysts. Nestle said organic growth — a closely-watched sales metric that excludes currency fluctuations and acquisitions — reached 2.2 percent, better than the two-percent forecast by the group.
In November, Freixe unveiled cost-saving measures, an increase in advertising spending focused on popular products, and a reorganization of Nestle’s water business. “The plans that we laid out at our capital market day are materializing,” Freixe said Thursday in a conference call. “It takes time to move the needle,” he said. “You will see Nestle moving in the right direction.”
© 2024 AFP
