Nestlé S.A.: Solid 2024 performance; executing on plan to accelerate growth

Realtime	Geld	Brief	Zeit
	88,04	88,18	11:20
	0,000	0,000	28.03.23

[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 profit¹	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.

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PDF press releases:

English (pdf) (https://www.nestle.com/sites/default/files/2025-02/full-year-results-press-release-2024-en.pdf)
Français (pdf) (https://www.nestle.com/sites/default/files/2025-02/full-year-results-press-release-2024-fr.pdf)
Deutsch (pdf) (https://www.nestle.com/sites/default/files/2025-02/full-year-results-press-release-2024-de.pdf)

Other reports published today:

Financial Statement 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 (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 Tel.: +41 21 924 3509
ir@nestle.com

Media:
Christoph Meier Tel.: +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 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 AOA	Zone Latin America	Zone Greater China	Nestlé Health Science	Nespresso	Other Businesses
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.