Nestlé lowers growth target amid weak consumer demand
Nestlé recorded slower growth than hoped in the first nine months of 2024, making it difficult to achieve previous growth targets for the year. The new CEO Laurent Freixe is therefore cutting expectations for 2024.
Nestlé generated total sales of CHF67.1 billion ($77.6 billion) in the first nine months of 2024, the world’s largest food company announced on Thursday. This corresponds to organic growth of 2%. Analysts had previously expected an increase of 2.4%.
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Former CEO Mark Schneider had recently emphasized that Nestlé would grow organically by “over 3%” for the year as a whole. But that seems too optimistic. Laurent Freixe, who took over as CEO in August after a long career at the food multinational, has now rejected these false hopes and lowered expectations for the year as a whole.
“Consumer demand has weakened in recent months and we expect this environment to remain subdued,” Freixe is quoted as saying in the press release. “In light of this and our further measures to reduce customer inventories in the fourth quarter, we have updated our outlook for the full year,” said the CEO.
Nestlé will probably only grow organically by “around 2%” in 2024, according to the press release. Analysts had expected Freixe to lower the annual guidance. The operating margin is also likely to suffer. According to the company boss, it will still be “around 17%”. Nestlé had previously predicted a slight improvement for the current year compared to the previous year’s margin of 17.3%.
Freixe is also keeping price increases low. These amounted to 0.6% in the third quarter. “A continuing normalisation after the unprecedented increases of the two previous years,” the company wrote. At the same time, sales volumes (known as real internal growth, RIG) increased by 1.3% in the third quarter. In the first quarter, management had increased prices by 3.4% and sold less in terms of volume (-2.0%). In the second quarter, prices rose more moderately by 0.6% and sales volumes increased again (+2.2%).
Translated from German by DeepL/jdp
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