REG - Nestle SA Nestle Holdings Inc - Solid 2024 performance
13/02/2025 07:00
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RNS Number : 9978W Nestle SA 13 February 2025
Nestlé Press Release
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Vevey/Switzerland, February 13, 2025
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[Ad hoc announcement pursuant to Art. 53 LR]
Solid 2024 performance; executing on plan to accelerate growth
Laurent Freixe, Nestlé CEO commented: "In a challenging macroeconomic context
and soft consumer environment, we achieved a solid performance in 2024 in line
with our latest guidance. Organic growth was 2.2%, with a return to positive
real internal growth of 0.8%, and both strengthened in the second half. Free
cash flow improved to CHF 10.7 billion, and the Board proposes an increase in
the dividend per share to CHF 3.05.
We have a clear roadmap to accelerate performance and transform for the
future. Increasing investment to drive growth is central to our plan. 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. We are making good progress and have 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."
In millions of CHF 2024 2023 Reported change
- Real internal growth (RIG) 0.8% -0.3%
- Pricing 1.5% 7.5%
Organic growth 2.2% 7.2%
Net acquisitions/(disposals) -0.3% -0.9%
Foreign exchange movements -3.7% -7.8%
Reported sales growth -1.8% -1.5%
Sales 91,354 92,998 -1.8%
Underlying trading operating profit 15,704 16,053 -2.2%
Gross profit margin 46.7% 45.9% 80 bps
Underlying trading operating profit margin 17.2% 17.3% -10 bps
Net profit(1) 10,884 11,209 -2.9%
Basic EPS 4.19 4.24 -1.0%
Underlying EPS 4.77 4.80 -0.8%
Dividend per share (proposed for 2024) 3.05 3.00 1.7%
Free cash flow 10,666 10,403 2.5%
(1) Profit for the year attributable to shareholders of the parent
Financial highlights
· Broad-based organic growth despite soft consumer demand, with a
return to positive RIG
○ Organic sales growth of 2.2%, with real internal growth (RIG) of
0.8% and pricing of 1.5%.
○ Growth strengthened during the year; organic growth was 2.1% in H1
and 2.3% in H2, with RIG improving from 0.1% in H1 to 1.4% in H2.
○ Growth was led by coffee, confectionery and PetCare; by geography,
growth was driven by emerging markets and Europe.
· Margin in line with latest guidance, reflecting input cost
increases and growth investments
○ Underlying trading operating profit (UTOP) margin of 17.2%, down 10
basis points (bps) on a reported basis and flat in constant currency, with
improved gross profit margin and a 40 bps increase in marketing investment.
○ Net profit down 2.9% to CHF 10.9 billion, basic EPS down 1.0% to CHF
4.19, with declines due to adverse foreign exchange movements.
○ Underlying EPS CHF 4.77, up 2.5% in constant currency, driven by
modest UTOP growth and lower share count, partly offset by increased financing
costs.
· Strong free cash flow generation, continued dividend per share
growth
○ Free cash flow improved to CHF 10.7 billion; proposed dividend per
share (DPS) increased
to CHF 3.05.
Operational and strategic progress and outlook
· Organizational changes implemented to increase simplicity and
strengthen accountability
○ Reduction in geographic reporting segments from 5 Zones to 3 Zones;
Nestlé Waters and premium beverages now a standalone global business.
○ Renewed performance management framework and incentive plans to
increase alignment.
· CHF 2.5 billion cost savings program launched, with first results
already achieved
○ Fuel for Growth cost savings in 2025 expected to be CHF 0.7 billion,
reaching
CHF 2.5 billion by the end of 2027.
○ Over CHF 300 million savings for 2025 already secured from actions
taken since Q4 2024.
· Plan to drive growth through increased investment and better
execution
○ As laid out at the recent Capital Markets Day, clear focus on
accelerating category growth and improving market share performance in 2025
and over the medium term.
○ Action plans now developed for 18 key underperforming business
cells, which represent 21% of sales; execution is progressing, with early
signs of improvement in some cells.
○ Growth investments stepping up, including an increase in advertising
and marketing to 9% of sales by the end of 2025.
○ Innovation now focused to drive greater impact, with six 'big bets'
for 2025 benefiting from accelerated global rollout plans.
2025 outlook unchanged
· Guidance in line with previous outlook, as accelerated delivery of
cost efficiencies offsets recent increases in key commodity prices.
· Organic sales growth expected to improve compared to 2024,
strengthening through the year as we continue to deliver on our growth plans.
· UTOP margin expected to be at or above 16.0% as we invest for
growth.
· Guidance assumes no significant change in key macroeconomic
variables.
Follow today's events live
09:00 CET Press call - video webcast:
https://edge.media-server.com/mmc/go/Nestle2024-FullYearResults/
10:30 CET Analyst & investor call - video webcast
https://edge.media-server.com/mmc/go/Nestle2024-FullYearResultsInvestorCall/
Full details on our website:
https://www.nestle.com/media/mediaeventscalendar/allevents/2024-full-year-results
Press release links
2024 full year results press release - French (pdf):
https://www.nestle.com/sites/default/files/2025-02/full-year-results-press-release-2024-fr.pdf
2024 full year results press release - German (pdf):
https://www.nestle.com/sites/default/files/2025-02/full-year-results-press-release-2024-de.pdf
Other reports published today
Financial Statements 2024 (pdf):
https://www.nestle.com/sites/default/files/2025-02/2024-financial-statements-en.pdf
Annual Review 2024 (pdf):
https://www.nestle.com/sites/default/files/2025-02/annual-review-2024-en.pdf
Corporate Governance Report 2024 (pdf):
https://www.nestle.com/sites/default/files/2025-02/corp-governance-report-2024-en.pdf
Non-Financial Statement 2024 (pdf):
https://www.nestle.com/sites/default/files/2025-02/non-financial-statement-2024.pdf
Creating Shared Value at Nestlé 2024 publication (pdf):
https://www.nestle.com/sites/default/files/2025-02/creating-shared-value-nestle-2024.pdf
Other language versions available in Publications:
https://www.nestle.com/investors/publications
Contacts
Investors - David Hancock +41 21 924 3509
ir@nestle.com
Media - Christoph Meier +41 21 924 2200
mediarelations@nestle.com
Operating and strategic review and outlook
Growth and investment
In 2024, organic growth was 2.2%, with pricing of 1.5% and RIG of 0.8%. This
return to positive RIG came despite soft consumer demand in many markets,
including consumer hesitancy towards global brands linked to geopolitical
tensions, as well as actions taken to reduce customer inventory. Organic
growth was 2.1% in the first half (H1) and 2.3% in the second half (H2), with
RIG of 0.1% in H1, improving to 1.4% in H2.
Organic growth of 2.2% was impacted by a slowdown in category growth and our
own below-market development. We have a clear focus on accelerating category
growth and improving our market share performance in 2025 and over the medium
term. An important part of how we deliver this is focusing our resource
allocation behind our strongest growth drivers: scaling existing winning
platforms and brands; accelerating the rollout of our innovation 'big bets';
and building new growth engines that capture emerging consumer trends.
On market share performance, in 2024 we gained or held share in approximately
half of our business cells by number, but in less than half of our business
cells by sales value. The majority of the Group's market share loss is driven
by 18 key underperforming business cells, which together account for
approximately 21% of Group sales. We are executing our action plans at pace
for each cell and are seeing some early signs of improvement.
A key element of improving our performance is strengthening our value
propositions to consumers and customers. We are increasing investment to
deliver superior product taste and quality, unbeatable value, unmissable
visibility and compelling brand communication. Price competitiveness is a
priority in the context of the high inflationary environment for certain
commodities, most notably coffee and cocoa. We are taking an agile approach to
passing on input cost increases, selectively investing in price as we focus on
restoring competitiveness. To strengthen brand communication, we are stepping
up investment and improving efficiency and effectiveness. Advertising and
marketing spend as a percentage of sales fell from 9.0% in 2019 to a low of
6.6% in H2-2022; in 2024, this recovered to 8.1% and is planned to increase
further to 9% by the end of 2025.
Efficiency and productivity
At our Capital Markets Day in November 2024, we announced a new three-year
cost reduction program we have called Fuel for Growth, which is in addition to
existing cost efficiency initiatives. We target CHF 2.5 billion run-rate cost
savings from the new program by the end of 2027, and these savings will be
used to fund increased investment in growth.
The Fuel for Growth program is expected to drive in-year savings of CHF 0.7
billion in 2025, CHF 1.4 billion in 2026 and CHF 2.3 billion in 2027. By the
end of 2027, we expect to have reached the full run-rate savings of CHF 2.5
billion. In 2025, CHF 300 million of the savings impact this year only, with
the further CHF 400 million being recurring savings that reduce the cost base
on an ongoing basis. Over CHF 300 million of the expected CHF 0.7 billion cost
savings for 2025 have already been secured.
Approximately three-quarters of the total savings in Fuel for Growth will come
in procurement, with the remainder coming from operational efficiencies and
commercial investments. Within procurement, the most significant savings will
come from AI-powered procurement and supplier management, spend consolidation
and aggregation, and e-sourcing expansion and automation. Within operational
efficiencies and commercial investments, key initiatives include reviewing
operating models as well as opportunities in manufacturing and logistics. The
savings in procurement and commercial investments are expected to have limited
costs to achieve; operational efficiencies will typically incur one-off costs
of approximately 2 times the annual savings.
These Fuel for Growth savings are in addition to over CHF 1 billion per annum
of ongoing efficiencies from existing Nestlé Continuous Excellence
initiatives.
Expected phasing of Fuel for Growth cost savings program:
In CHF billion 2025 2026 2027
2025 non-recurring 0.3
2025 recurring savings 0.4 0.4 0.4
2026 recurring savings 1.0 1.0
2027 recurring savings 0.9
Total in-year savings 0.7 1.4 2.3
Run-rate savings at end of 2027 2.5
Strengthening foundations
Nestlé's success depends on alignment and in-market execution, and people are
critical to that. 2024 was an important year of change in our leadership. Our
new leadership team moved quickly to align and refocus the organization. We
have simplified the Group's structure and reorganized Nestlé Waters and
premium beverages into a global, standalone business. This is complemented by
the introduction of a more aligned performance management framework - our
'Operational Master Plan' - to increase Group-wide performance and drive pace
of execution across the organization. We have also accelerated our digital
transformation as we move to becoming a real-time, end-to-end connected
enterprise, powered by data and artificial intelligence.
Operating sustainably is an important foundation for Nestlé, and we made
progress across multiple areas. In particular, we delivered our 2025
greenhouse gas emission reduction target one year ahead of plan and made
strong progress with our regenerative agriculture agenda.
Guidance
Our 2025 guidance is in line with the outlook we provided at the Capital
Markets Day, with accelerated delivery of cost efficiencies offsetting recent
increases in key commodity prices, especially in coffee and cocoa. In 2025,
organic sales growth is expected to improve compared to 2024, strengthening
through the year as we continue to deliver on our growth plans. UTOP margin is
expected to be at or above 16.0% as we invest for growth. Guidance assumes no
significant change in key macroeconomic variables.
Our objective remains to deliver superior, sustainable and profitable growth.
In the medium term, we continue to expect organic sales growth to be at 4%
plus in a normal operating environment, with an underlying trading operating
profit margin at 17.0% plus.
Financial review
Sales
Total reported sales decreased by 1.8% to CHF 91.4 billion, including negative
impacts of 3.7% from foreign exchange movements and 0.3% from net
divestitures. Organic growth was 2.2%. Pricing was 1.5%, reflecting a
reduction in inflation across most categories after two years of high input
cost and price increases. RIG returned to positive growth at 0.8% and was
still impacted by soft consumer demand in many markets, including consumer
hesitancy towards global brands in certain markets. Additionally, actions
taken to reduce customer inventory in the second half of the year reduced
full-year RIG by approximately 20 basis points.
By geography, organic growth was driven by emerging markets and Europe, which
together more than offset a decrease in North America. In developed markets,
organic growth was 1.2%, with positive pricing and RIG. In emerging markets,
organic growth was 3.7%, led by pricing with positive RIG.
Organic growth by product category was as follows:
· Coffee was the largest growth contributor with mid single-digit
growth, supported by the three leading coffee brands: Nescafé, Nespresso and
Starbucks.
· Sales in confectionery grew at a mid single-digit rate, led by
KitKat and key local brands.
· PetCare delivered low single-digit growth, driven by continued
momentum for science-based premium brands Purina ProPlan, Purina ONE and
Friskies.
· Nestlé Health Science achieved mid single-digit growth, with
double-digit growth in the second half of the year.
· Water reported low single-digit growth, with solid growth for
S.Pellegrino and supported by the successful launch of Maison Perrier.
· Infant Nutrition sales grew at a low single-digit rate, supported
by continued momentum for NAN and Lactogen.
· Dairy posted negative growth, as a decline in coffee creamers and
ambient dairy more than offset growth for affordable milks and dairy culinary
solutions.
· Culinary reported negative growth, with mid single-digit growth
in Maggi more than offset by a decline in frozen food in North America.
By channel, organic growth in retail sales was 2.1%. Organic growth of
out-of-home channels was 3.2%. E-commerce sales grew organically by 11.3%,
reaching 18.9% of total Group sales.
Gross profit and operating profit
Gross profit was flat at CHF 42.7 billion, and the gross profit margin
increased by 80 bps to 46.7%. The gross profit margin reached 47.2% in H1,
then declined 90 bps sequentially to 46.3% in H2, driven by higher input costs
in coffee and cocoa.
Distribution expenses as a percentage of sales was flat versus the prior year
at 8.3%. Marketing and administration expenses as a percentage of sales
increased by 90 bps to 19.8%. This comprised: advertising and marketing
expenses as a percentage of sales up 40 bps to 8.1%, as we began to step up
investment; and administration expenses as a percentage of sales up 50 bps to
11.7% of sales, largely reflecting higher labor costs, the appreciation of the
Swiss Franc and one-off items. Research and development costs as a percentage
of sales was flat versus the prior year at 1.8%.
Underlying trading operating profit was CHF 15.7 billion, a decrease of 2.2%
on a reported basis and an increase of 1.3% in constant currency. The
underlying trading operating profit margin was 17.2%, a decrease of 10 bps on
a reported basis and flat in constant currency.
Restructuring and net other trading items was CHF 1.1 billion compared with
CHF 1.5 billion in the prior year, with the reduction mainly due to lower
restructuring costs. Trading operating profit increased by 0.8% to CHF 14.6
billion. The trading operating profit margin reached 16.0%, an increase of 40
bps on a reported basis and 50 bps in constant currency.
As % of sales 2024 2023 Reported change Constant currency change
Sales 100.0% 100.0% -
Cost of goods sold -53.3% -54.1% 80 bps
Gross profit margin 46.7% 45.9% 80 bps
Other revenue 0.4% 0.4% 0 bps
Distribution expenses -8.3% -8.3% 0 bps
Marketing and administration expenses -19.8% -18.9% -90 bps
Research and development costs -1.8% -1.8% 0 bps
Underlying trading operating profit margin 17.2% 17.3% -10 bps 0 bps
Other trading income 0.1% 0.1% 0 bps
Other trading expenses -1.3% -1.8% 50 bps
Trading operating profit margin 16.0% 15.6% 40 bps 50 bps
Other operating income 0.5% 0.3% 20 bps
Other operating expenses -0.4% -0.8% 40 bps
Operating profit margin 16.1% 15.1% 100 bps
Net financial expenses and income tax
Net financial expenses increased to CHF 1.5 billion from CHF 1.4 billion,
reflecting a higher level of average net debt and an increase in interest
rates. The average cost of net debt was 2.6% compared to 2.5% in 2023.
The Group reported tax rate was 25.0%, compared to 18.2% in the prior year.
The increase was mainly due to a write-off in deferred tax assets from changes
in utilization projections and the absence of the favorable one-off items that
positively impacted 2023. The underlying tax rate increased by 70 basis points
to 21.9%, driven by higher corporate and withholding tax rates in some
jurisdictions, as well as changes in the geographical and business mix of
profits.
Net profit and earnings per share
Net profit decreased by 2.9% to CHF 10.9 billion. Basic earnings per share
decreased by 1.0% to
CHF 4.19, reflecting the movement in net profit and the impact of the share
buyback program.
Underlying net profit was CHF 12.4 billion, a decrease of 2.6%, and an
increase of 0.6% in constant currency. Underlying earnings per share was CHF
4.77, a decrease of 0.8%, and an increase of 2.5% in constant currency. The
share buyback program contributed 1.1% to the underlying earnings per share
change, net of finance costs.
Cash flow
Cash generated from operations increased to CHF 19.6 billion from CHF 19.2
billion in 2023. Free cash flow was CHF 10.7 billion compared to the prior
year free cash flow of CHF 10.4 billion, which included CHF 0.6 billion
proceeds from the disposal of a financial asset, with the increase primarily
due to lower taxes paid and lower cash restructuring costs, as well as reduced
capital expenditure.
Dividend
At the Annual General Meeting on April 16, 2025, the Board of Directors will
propose a dividend of CHF 3.05 per share, an increase of 5 centimes. Nestlé
has maintained or increased the dividend in Swiss francs over the last 65
years. We remain committed to the long-held practice of increasing the
dividend in Swiss francs every year.
The last trading day with entitlement to receive the dividend will be April
17, 2025. The net dividend will be payable as from April 24, 2025.
Shareholders entered in the share register with voting rights on April 9,
2025, at 12:00 noon (CEST) will be entitled to exercise their voting rights.
Share buyback program
In 2024, the Group repurchased 48.2 million Nestlé S.A. shares for CHF 4.4
billion under the
CHF 20.0 billion share buyback program that began in January 2022 and was
completed as planned in December 2024. Under the program, 187.4 million shares
were repurchased in the three-year period, of which 143.9 million have so far
been cancelled. At the upcoming Annual General Meeting, the Board of Directors
will propose the cancellation of the remaining 43.5 million repurchased
shares, reducing the share capital of Nestlé S.A. from CHF 262,000,000 to CHF
257,652,000. We do not currently anticipate initiating a new share buyback
program in 2025.
Net debt
Net debt was CHF 56.0 billion as at December 31, 2024, compared to CHF 49.6
billion at December 31, 2023. The increase largely reflected cash outflows for
the dividend payment of CHF 7.8 billion and share buybacks of CHF 4.5 billion
as well as the impact of foreign exchange movements. The ratio of net debt to
Adjusted EBITDA was 2.90 times at December 31, 2024, compared to 2.54 times at
December 31, 2023. This is towards the top of our target range of 2 to 3 times
for net debt to Adjusted EBITDA.
Return on invested capital
Return on invested capital was 14.1%, compared to 13.9% in 2023. This
improvement reflects a lower base of average invested capital, mainly linked
to working capital, and a reduction in restructuring costs.
Minority participations
In late 2024, we established Nestlé Equity Holdings to consolidate ownership
of many of our minority participations, enhancing governance and allowing for
a more consistent and efficient approach to managing these interests.
Operating segment review
Total Group Zone North America Zone Europe Zone Zone Latin America Zone Greater China Nestlé Health Science Nespresso Other Businesses
AOA
Sales FY-2024 (CHF m) 91,354 25,336 18,910 16,793 11,933 4,973 6,739 6,378 292
Sales FY-2023 (CHF m) 92,998 25,995 19,098 17,519 12,196 5,037 6,498 6,372 283
Real internal growth (RIG) 0.8% -0.8% 0.8% 0.6% -0.3% 4.3% 5.5% 1.6% 5.3%
Pricing 1.5% 0.4% 2.5% 2.8% 2.7% -2.1% 0.7% 0.6% 1.3%
Organic growth 2.2% -0.5% 3.3% 3.4% 2.5% 2.1% 6.2% 2.2% 6.6%
Net M&A -0.3% -0.1% -1.9% 0.0% 0.4% 0.1% 0.2% 0.2% 0.0%
Foreign exchange -3.7% -2.0% -2.5% -7.5% -4.9% -3.5% -2.8% -2.4% -2.7%
Reported sales growth -1.8% -2.5% -1.0% -4.1% -2.2% -1.3% 3.7% 0.1% 3.9%
UTOP FY-2024 (CHF m) 15,704 5,640 3,192 3,916 2,429 803 943 1,278 -13
UTOP FY-2023 (CHF m) 16,053 5,768 3,127 4,109 2,520 832 777 1,291 -12
UTOP Margin FY-2024 17.2% 22.3% 16.9% 23.3% 20.4% 16.1% 14.0% 20.0% -4.3%
UTOP Margin FY-2023 17.3% 22.2% 16.4% 23.5% 20.7% 16.5% 12.0% 20.3% -4.3%
UTOP Margin YoY -10bps +10bps +50bps -20bps -30bps -40bps +200bps -30bps Flat
Zone North America
Our growth in North America in 2024 was disappointing. Organic sales growth of
-0.5% reflects mixed delivery across the portfolio, in the context of a
challenging consumer environment. We delivered RIG-led positive organic growth
in approximately two-thirds of the business by sales. This was offset by weak
performance in frozen food and coffee creamers. Turnaround plans are underway
in both businesses. In Zone North America, UTOP margin increased modestly,
which was the result of an improvement in gross profit margin and a step-up in
growth investments.
Segment performance summary
· Organic growth was -0.5%, with -0.8% RIG and 0.4% pricing. Pricing
was negative in H2, driven by competitive dynamics in PetCare and price
adjustments in frozen food and coffee creamers.
· Reported sales decreased by 2.5% to CHF 25.3 billion, including a
-2.0% impact from foreign exchange movements and -0.1% from net divestitures.
· Market share gains were achieved in coffee, while we lost market
share in frozen pizza and coffee creamers.
· UTOP margin increased by 10 bps to 22.3%. Gross profit margin
expanded, supported by pricing, price pack architecture and mix management,
and structural cost control was strong. Advertising and marketing investment
was increased significantly to support future growth.
Key sales growth drivers by product category
· PetCare was the largest growth contributor, with low single-digit
growth driven by premium brands, particularly in the cat and therapeutic diets
segments.
· Confectionery grew at a double-digit pace, driven by Tollhouse
baking products and pricing actions particularly in the second half of the
year.
· Beverages (including coffee and coffee creamers) delivered positive
growth overall, with new product launches supporting continued strong momentum
for Nescafé and Starbucks, offsetting a decrease in Coffee mate.
· Infant Nutrition saw a sales decrease, with a decline in Gerber in
the context of a category slowdown in baby food.
· Frozen food posted negative growth, primarily reflecting the impact
of price competition in pizza and the winding down of the frozen meals
business in Canada.
Zone Europe
In Zone Europe, our sales growth was broad-based, with improved market share
trends in a number of categories. Growth was mainly pricing led, reflecting
the inflationary environment for coffee and confectionery, supported by
positive RIG in coffee and PetCare. Growth was impacted by temporary
delistings in the third quarter, but recovered in the fourth quarter, driven
by coffee and confectionery. UTOP margin increased, with improved gross profit
margin and portfolio optimization helping fund the step-up in growth
investment.
Segment performance summary
· Organic growth was 3.3%, comprising 0.8% RIG and 2.5% pricing.
· Reported sales decreased by 1.0% to CHF 18.9 billion, including
-2.5% impact from foreign exchange movements and -1.9% from net divestitures.
· Market share gains were achieved in coffee and PetCare, with losses
in confectionery and water.
· UTOP margin increased by 50 basis points to 16.9%, driven by strong
gross profit margin improvement and supported by portfolio optimization.
Key sales growth drivers by product category
· Coffee posted mid single-digit growth, driven by Nescafé soluble
coffee and Starbucks products.
· Sales in confectionery grew at a mid single-digit pace, driven by
KitKat and key local brands.
· PetCare delivered low single-digit growth, led by Purina ONE,
Gourmet and ProPlan.
· Nestlé Professional achieved mid single-digit growth, driven by
beverage solutions.
· Water saw low single-digit growth, impacted by supply constraints
in the second half of the year.
· Infant Nutrition posted negative growth, reflecting a category
slowdown.
Zone Asia, Oceania and Africa
We achieved solid organic sales growth in Zone AOA, with most categories and
regions reporting positive RIG. We improved market share trends, particularly
for key global brands like KitKat, reignited growth momentum in PetCare and
significantly stepped up e-commerce growth. Several macroeconomic headwinds
weighed on growth, with consumer hesitancy towards global brands linked to
geopolitical tensions persisting throughout the year. In the fourth quarter,
we took action to reduce customer inventories in our infant nutrition and
dairy categories. For the year, UTOP margin declined, driven by increased
investment in advertising and marketing.
Segment performance summary
· Organic growth was 3.4%, with 0.6% RIG and 2.8% pricing.
· Reported sales decreased by 4.1% to CHF 16.8 billion, strongly
impacted by foreign exchange movements, which reduced sales by 7.5%.
· Key markets driving growth were Central and West Africa, the Middle
East and North Africa, and the Philippines.
· Key market share developments were gains in PetCare and losses in
dairy and culinary.
· UTOP margin decreased by 20 basis points to 23.3%, driven by
increased investment in advertising and marketing.
Key sales growth drivers by product category
· Coffee posted mid single-digit growth, driven by Nescafé soluble
and ready-to-drink offerings.
· Culinary delivered high single-digit growth fueled by strong sales
momentum for Maggi.
· Nestlé Professional achieved high single-digit growth, with strong
contributions from most geographies and categories.
· Confectionery grew at a mid single-digit pace, driven by KitKat and
supported by new product launches.
· PetCare achieved high single-digit growth, led by key brands Felix
and Purina ONE.
· Infant Nutrition posted low single-digit growth following actions
to reduce customer inventories.
· Dairy saw a sales decline, impacted by the introduction of a sales
tax in Pakistan as well as actions to reduce customer inventories and reshape
the portfolio.
Zone Latin America
Sales growth in Zone Latin America was pricing-led growth, with RIG declining
slightly. During the year, consumer demand softened and financial pressure on
customers increased in several markets due to higher borrowing costs. These
headwinds led to actions to reduce customer inventories, which weighed on RIG
in Q3. Improved growth in Q4 was driven by confectionery and coffee, with new
price increase measures being taken in both categories. UTOP margin for the
year declined due to increased investments in growth as well as higher costs
linked to the acquisition of the Grupo CRM confectionery business.
Segment performance summary
· Organic growth was 2.5%, with -0.3% RIG and 2.7% pricing.
· Reported sales decreased by 2.2% to CHF 11.9 billion, with a
negative impact of 4.9% from foreign exchange movements.
· Key markets driving growth were Brazil and Mexico; weaker
performance in smaller markets such as Peru and Colombia.
· Market share developments included gains in portioned coffee and
culinary, with losses in dairy and soluble coffee.
· UTOP margin decreased by 30 basis points to 20.4%. The reduction
follows increased advertising and marketing investments.
Key sales growth drivers by product category
· Confectionery delivered high single-digit growth, driven by key
local brands, particularly Garoto, and supported by new product launches in
chocobakery.
· Nestlé Professional grew at a double-digit pace, underpinned by
customer acquisition.
· Coffee saw mid single-digit growth, led by Nescafé, with strong
growth for Nescafé Dolce Gusto.
· Culinary reported low single-digit growth supported by strong sales
momentum for Maggi.
· PetCare posted flat growth, supported by Felix and Friskies.
· Infant Nutrition and dairy reported sales declines as robust demand
for NAN infant formula was more than offset by a sales decline in Nido.
Zone Greater China
In Zone Greater China, growth was underpinned by positive RIG delivery in
every quarter despite soft consumer demand and intense price competition in
several categories. This performance was achieved by driving faster innovation
in key categories and adapting route-to-market and channel strategies to
capture new growth opportunities. The decline in UTOP margin reflects
increased commodity costs and higher growth investments.
Segment performance summary
· Organic growth was 2.1%, with 4.3% RIG and -2.1% pricing.
· Reported sales decreased by 1.3% to CHF 5.0 billion, as foreign
exchange reduced sales by 3.5%.
· Market share developments included gains in Infant Nutrition and
confectionery, with losses in culinary and dairy.
· UTOP margin decreased by 40 basis points to 16.1%, reflecting
higher input costs and increased advertising and marketing investments.
Key sales growth drivers by product category
· Infant Nutrition was the largest contributor to organic growth,
with high single-digit growth, driven by NAN and supported by improved sales
momentum for illuma.
· Coffee posted mid single-digit growth, driven by distribution
expansion and new innovations, particularly in Nescafé ready-to-drink
offerings.
· Confectionery grew at a mid single-digit rate, with solid growth
for Hsu Fu Chi and Shark Wafer, supported by new product launches and
e-commerce growth.
· Nestlé Professional delivered low single-digit growth in
challenging market conditions, while culinary and dairy-related categories
reported negative growth.
Nestlé Health Science
Nestlé Health Science delivered a significant step-up in growth and margin in
2024, with all segments contributing to the improved performance. Organic
growth recovered through the year, with double-digit growth in the second
half. A key driver of the improved performance was the resolution of supply
constraints for our U.S. vitamins, minerals and supplements (VMS) business.
UTOP margin increased strongly, driven by growth leverage, mix improvement and
cost efficiencies.
Segment performance summary
· Organic growth was 6.2%, with 5.5% RIG and 0.7% pricing.
· Reported sales increased by 3.7% to CHF 6.7 billion, including a
foreign exchange impact reducing sales by -2.8%.
· Market share increased in Medical Nutrition and stabilized in VMS
after declining in the second half of 2023.
· UTOP margin improved by 200 basis points to 14.0%. The increase was
driven by growth leverage, mix improvement and cost efficiencies.
Key sales growth drivers
· By geography, North America posted mid single-digit growth, Europe
delivered double-digit growth and other regions combined saw positive growth.
· VMS achieved mid single-digit growth, with double-digit growth in
the second half and an improvement in market share trends.
· Active Nutrition posted mid single-digit growth, supported by
strong momentum for Orgain, Vital Proteins and healthy aging products.
· Medical Nutrition delivered double-digit growth, with continued
market share gains. Growth was driven by strong sales momentum for adult
medical care products, particularly Peptamen and Resource, as well as Vitaflo.
Sales for gastrointestinal products continued to grow at a double-digit rate.
Nespresso
Nespresso delivered solid RIG-led growth, driven by the continued rollout of
Vertuo, particularly in the U.S. and continued good growth in out-of-home
channels. Q4 saw the highest quarterly growth of the year, supported by strong
seasonal campaigns and the impact of pricing actions. UTOP margin decreased as
we invested behind the expansion of Vertuo and structural costs
increased.
Segment performance summary
· Organic growth was 2.2%, with 1.6% RIG and 0.6% pricing.
· Reported sales increased by 0.1% to CHF 6.4 billion, including -2.4%
impact from foreign exchange movements.
· We achieved market share gains in the U.S., but lost some share in
Europe.
· UTOP margin was down 30 bps to 20.0%, driven by increased
advertising and marketing investments as well as higher structural costs.
Key sales growth drivers
· By geography, sales in North America grew at a mid single-digit
rate with continued market share gains. In Europe, sales posted close to flat
growth.
· By system, growth was driven by the Vertuo system, with strong
sales momentum across all geographies. Sales for out-of-home channels grew at
a mid single-digit rate backed by the continued rollout of the Momento system.
Annex
Full-year sales and underlying trading operating profit (UTOP) overview by
product
Total Group Powdered & liquid beverages Water Milk products & ice cream Nutrition & Health Science Prepared dishes & cooking aids Confec-tionery PetCare
Sales FY-2024 (CHF m) 91 354 24 598 3 180 10 397 15 137 10 711 8 449 18 882
Sales FY-2023 (CHF m) 92 998 24 786 3 320 10 981 15 278 11 666 8 107 18 860
Real internal growth (RIG) 0.8% 1.6% -1.0% -0.7% 1.9% -2.2% -0.2% 2.1%
Pricing 1.5% 1.7% 3.2% 0.1% 0.9% 0.5% 6.4% 0.6%
Organic growth 2.2% 3.3% 2.3% -0.6% 2.8% -1.7% 6.2% 2.7%
FY-2024 Underlying TOP (CHF m) 15 704 4 920 297 2 442 3 006 2 137 1 299 4 087
FY-2023 Underlying TOP (CHF m) 16 053 5 130 351 2 688 2 831 2 136 1 364 3 912
FY-2024 Underlying TOP Margin 17.2% 20.0% 9.3% 23.5% 19.9% 19.9% 15.4% 21.6%
FY-2023 Underlying TOP Margin 17.3% 20.7% 10.6% 24.5% 18.5% 18.3% 16.8% 20.7%
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