Swiss food and drink giant Nestle has reported lower profits for 2024 due to weak economic and consumer demand.
The company, whose products include Nescafé coffee, Perrier bottled water, Haagen-Dazs ice cream and KitKat chocolates, said net profit dropped 2.9% to CHF 10.884 billion on sales revenue which eased 1.8% to CHF 91.354 in the year ending 31 December.
The dividend was lifted to CHF 3.05, from CHF 3.00 a year earlier, although basic earnings per share (EPS) eased 1.0% to CHF 4.19 and underlying EPS was barely changed at CHF 4.77.
Although reported sales growth was down, Nestle said organic growth was 2.2%, which was still a decline from the 7.2% organic growth in 2023.
CEO Laurent Freixe said Nestle performed solidly and in line with its latest guidance in a challenging macroeconomic context and soft consumer environment, with organic growth and real internal growth turning positive in the second half and free cash flow improving by 2.5% to CHF 10.7 billion.
“We have a clear roadmap to accelerate performance and transform for the future. Increasing investment to drive growth is central to our plan,” Freixe said in a press release.
"This means delivering superior product taste and quality with unbeatable value, scaling our winning platforms and brands, accelerating the rollout of our innovation ‘big bets’ and addressing underperformers.
“We are creating the fuel for these growth investments through our new CHF 2.5 billion three-year cost savings program.”
He said Nestle had already secured over CHF 300 million of these savings for 2025.
"From 2025, we expect our actions to drive an improvement in organic sales growth, with a lower underlying trading operating profit margin in the short term as we invest for growth. While there is macroeconomic uncertainty, we have lots of opportunities ahead of us, and we have the strategy, the resources and the people and team to deliver,” Freixe said.
Nestle said its growth was led by coffee, confectionary and PetCare, with the majority being driven by emerging markets in Europe.
In Europe, Nestle experienced organic growth of 3.3%, compared with 0.5% in North America.
The growth in Europe was largely down to pricing and the decline in North America can be attributed to a challenging consumer environment with coffee creamers and frozen food being particular areas of concern.
Nestle shares (SWX: NESN) closed CHF 4.90 higher at 83.68 (6.22%) on Thursday, giving the company a market capitalisation of CHF 219.24.