by Richa Naidu
London (Reuters) – Nestlé reported on Thursday of its annual turnover slightly higher than forecasts, while the food giant increased the prices of its products, while announcing to expect a drop in its margins in 2025.
Under the direction of its new director general, Laurent Freixe, the largest manufacturer of packaged food products seeks to increase its sales volumes, to invest in innovation and to restore the confidence of investors, after years of priced prices who have alienated consumers and weighed on its marketing expenses.
Nestlé reiterated its forecast for higher organic sales growth in 2025 compared to the 2024 levels, thus confirming the prospects announced during an investor day in November.
The manufacturer of Nespresso marks, Kitkat and Perrier said that its underlying operating margin for 2025 would amount to 16% or more, against 17.2% in 2024.
“We expect a lower short-term underlying exploitation margin, because we invest in growth,” said Laurent Freixe.
The action takes more than 5.6% at 9:05 a.m. GMT.
“Although the environment remains very difficult, we believe that the 2024 results mark a new start,” notes Jean-Philippe Bertschy, analyst at Vontobel.
The prices of the two main raw materials of Nestlé – coffee and cocoa – are at record levels, but the company has promised that it would only have part of the increase in the cost of inputs on consumers.
The competitors of Nestlé, including Unilever, slowed down their price increases last year, in order to win back consumers who had turned to cheaper products in the context of the cost of living crisis.
Nestlé was not as quick to slow down these increases and several quarters of low sales volumes led to the eviction of former managing director Mark Schneider last August.
Nestle prices increased by 1.5% last year, very much exceeding 1.4% of analysts.
The manufacturer of the Maggi broth cubes recorded organic growth of 2.2% during the year ended on December 31. This figure excludes the impact of exchange movements and acquisitions.
Analysts expected organic sales growth of 2.1%.
Turnover, on the other hand, decreased by 1.8% to 91.35 billion Swiss francs (100.27 billion dollars).
(Richa Naidu; Diana Mandia; edited by Augustin Turpin)
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