Nestlé S.A., the world’s largest food company, recently announced its financial performance for 2024, reporting revenues of 91.4 billion francs. This figure marks a 1.8% decrease from the prior year, but when adjusted for currency fluctuations and corporate acquisitions, organic growth was recorded at 2.2%, signaling some resilience amid challenging market conditions.
Despite the decline, Nestlé’s stock reacted positively on the day of the announcement, rising approximately 6% to around 84 francs, the highest price since late October 2024. Investors appeared to welcome the news after the company had managed to outperform its own previously established lower targets. "Die Nestlé-Aktie legt am Donnerstag im frühen Handel stark zu," mentioned sources covering the markets.
According to Nestlé’s report, the company’s profit shrank to 10.9 billion francs, showing a decline of 2.9% year-on-year. This reduction reflects the growing difficulty consumers face with price increases, causing revenue growth to slow to 2.2% from 7.2% the year prior. Analyst expectations had forecasted earnings of 11.2 billion francs for 2024, highlighting how the company was slightly underwhelming against projections, even as their organic growth slightly exceeded estimates.
Laurent Freixe, newly appointed CEO, acknowledged during the press conference following the results release, "Wir brauchen etwas Zeit, bis wir aus allen Rohren feuern können," indicating the need for patience as they implement new strategies aimed at revitalizing the company's growth.
Overall, the financial breakdown revealed several key areas of performance. The organic revenue growth included price adjustments of 1.5% and volume increases of 0.8%. Although the operational profit margin decreased slightly from 17.3% to 17.2%, it remained relatively stable. Even more worrying was the performance of specific product categories, where sales for dairy products and prepared meals fell, particularly in North America, whereas coffee brands like Nescafé, Nespresso, and Starbucks, alongside confectionaries, experienced growth.
Investment strategies are also being adjusted. Freixe has committed to saving approximately 2.5 billion francs through cost-cutting measures aimed at funding higher investments in marketing to regain lost market shares. This savings initiative is particularly focused on improving efficiencies within their substantial procurement budget, which stands at about 60 billion francs.
Mood among analysts post-release has turned somewhat optimistic, marking the earnings report as potentially signifying a turning point for Nestlé. Financial expert Jean-Philippe Bertschy from Bank Vontobel remarked, "Obwohl das Umfeld nach wie vor sehr herausfordernd ist, glauben wir, dass die Ergebnisse des Geschäftsjahres 2024 einen Neuanfang markieren," inferring the reported results could lay the groundwork for renewed growth.
Another positive highlight for shareholders is the announced dividend increase of five rappen per share to 3.05 francs. This marks the 29th consecutive year of dividend increases for Nestlé, which may be seen as reassurance to investors amid fluctuative stock performance earlier this year.
Freixe’s leadership style contrasts starkly with his predecessor, Mark Schneider, who faced broader criticism over the company’s slowing growth rate and required multiple downgrades to earnings expectations. Following Schneider's departure and the challenging market conditions, the new CEO seems determined to establish a more constructive corporate environment and drive forward innovative product initiatives. These include new product launches such as unique Nespresso offerings and specialty pet foods, which could open up additional growth avenues.
With various uncertainties still on the horizon, including inflationary pressures and changes to trading policies, especially from the U.S. government, Nestlé's leadership is focused on local production, having confirmed 90% of goods sold within major markets like the U.S. and China are locally produced. This strategy aims to shield the company from tumultuous global trade fluctuations.
The market’s reactions following Nestlé's earnings report demonstrate the ever-evolving dynamics within the food industry, where consumer habits play a pivotal role. Central to Nestlé's efforts moving forward will be the balancing act of enhancing profitability and ensuring sustained growth across its multiple global markets. The cautious optimism shown by investors today reflects faith in the new management’s ability to steer the company back toward stable and positive long-term performance.