Nestlé reports nine-month sales for 2024
Nestlé S.A has released its nine-month sales report for 2024 showing modest organic growth for the nine-months of this year even with softening consumer spending.
In the company’s financial filing made public today, Nestlé reported organic growth of 2.0% for the first nine months, with positive real internal growth (RIG) of 0.5% due to soft consumer demand and consumer hesitancy towards global brands, linked to geopolitical tension.
Laurent Freixe, chief executive officer for Nestlé S.A told analysts that “consumer demand has been subdued across many of our regions. In the third quarter, we saw softening demand and actions to reduce customer inventory levels.”
“Another key factor shaping our organic growth this year has been the normalization of pricing, following unprecedented increases over the prior two years,” he continued. “Our growth over the nine months was driven by coffee, PetCare and confectionery. And I am pleased to see Nestlé Health Science’s recovery going to plan, with growth reaching a double-digit pace in the third quarter. While market shares for billionaire brands improved, overall market share for the total Group was broadly in line with the first half.”
He added that more work needs to be done to drive improvement, and this is going to be one of my key priorities going forward.
“Given the consumer environment and our further actions to reduce customer inventories in the fourth quarter, we have revised our full-year guidance. We now expect our full year organic growth to be around 2%, in line with current trading, and our underlying trading operating profit margin to be around 17.0%. Underlying EPS growth in constant currency is expected to be broadly flat year-on-year.”
North American coffee market showed strong growth
According to the company’s filing, pricing was 1.6%, continuing to normalize following unprecedented increases in the prior two years. In the third quarter, pricing increases in confectionery and coffee linked to higher input costs were partly offset by the impact of promotional activity in PetCare and dairy. By geography, organic growth was driven by emerging markets and Europe, which together more than offset a slight decrease in North America. In developed markets, organic growth was 1.1%, with positive pricing and RIG. In emerging markets, organic growth was 3.5%, led by pricing with positive RIG.
Coffee was the largest growth contributor with mid-single-digit growth, supported by the three coffee brands, Nescafé, Starbucks and Nespresso. Purina PetCare delivered low single-digit growth, driven by continued momentum for science-based premium brands as Purina ProPlan, Purina One and Fancy Feast.
Anna Manz, chief financial officer, with Nestlé S.A said that this third quarter said the company’s North American market that while RIG remained positive at 0.3% it was lower than the 2.8% in the second quarter.
“As we flagged at the half year results, RIG has been impacted by the phasing of customer inventory related to promotional campaigns. This positively impacted the second quarter and negatively impacted the third quarter, by approximately 100 basis points. Adjusting for that phasing, third quarter RIG is only slightly below the second quarter.”
“Both PetCare and coffee delivered positive RIG and gained market share,” she continued. “On the other hand, our frozen food and coffee creamer businesses continue to be challenged by increased price competition and a value-seeking consumer. Across the Zone, we are focusing on meeting consumer needs through price competitiveness, innovation and marketing. We continue to bring new products across categories with good traction in PetCare, coffee and water. In frozen food, some key product launches, including Vital Pursuits, started to hit the market at the end of the third quarter.”
Sales of confectionery grew at a mid-single-digit rate, led by Tollhouse baking products. Water delivered low single-digit growth, driven by sustained momentum for S.Pellegrino and the launch of Maison Perrier.
Growth for the beverages category was generally positive, with continued momentum for Starbucks and Nescafé offsetting a sales decrease in Coffee mate. Frozen food saw negative growth, with the category continuing to see intense competition, particularly in pizza.
Looking forward for the remainder of the year, Nestlé S.A organic sales growth to be around 2.0%, in line with the first nine months.
Nestlé announces changes to its organization and its executive board
To continue to drive further performance improvements for the remainder of the year, the Nestlé Board of Directors announced changes to its executive board.
Zone Latin America (LATAM) and Zone North America (NA) will merge to form Zone Americas (AMS), which will be led by Steve Presley. He will relocate to Nestlé’s headquarters in Vevey, Switzerland. Zone Greater China Region (GCR) will become part of Zone Asia, Oceania and Africa (AOA), under the leadership of Remy Ejel. David Zhang will step down from the executive board and will remain chairman and CEO of the Greater China Region. Zone Europe (EUR) will continue to be led by Guillaume Le Cunff and remains unchanged.
"A leaner Executive Board structure and close collaboration of the leadership team at the headquarters will increase simplicity, speed up decision-making and strengthen the momentum behind global initiatives. We will continue to build on the strengths of our Market Heads to ensure consistent in-market execution across the group," said Nestlé CEO Freixe.
Other changes announce is that Bernard Meunier has decided to step down from the executive board on March 31, 2025, and will lead strategic projects for the group. David Rennie, currently head of Nestlé Coffee Brands will succeed Meunier as the head of Strategic Business Units (SBUs) and Marketing and Sales. Nestlé Coffee Brands, with the exception of Nespresso, will be integrated into the SBU organization.
Philipp Navratil, who currently leads Nespresso will join the executive board and report directly to the Nestlé CEO.
"With these organizational changes, all the leaders of key units driving our performance and our transformation will now report directly to me,” said Freixe. “This is crucial, as we sharpen our focus on consumers and customers and restore investment in our brands and in innovation to expand market share and accelerate our performance. Going forward, we are also placing a greater emphasis on Nestlé’s digital transformation into a real-time, end-to-end connected, data- and AI-powered organization. I am confident these changes will optimally position Nestlé for future success.”
