Nestle Stock: Strong Rally Despite Growth Slowdown

Nestle shares surged over 6% on Thursday, reaching 84.02 CHF, as investors responded positively to the company's annual results and strategic outlook. Despite reporting a 1.8% revenue decline to 91.4 billion francs and a 2.9% drop in net profit to 10.9 billion francs, the food giant's organic growth of 2.2% exceeded market expectations. The company's performance was particularly strong in coffee, confectionery, and pet care segments, with emerging markets and Europe driving growth. In a show of confidence, Nestle announced its 29th consecutive dividend increase, raising it by 0.05 francs to 3.05 francs per share. The company's free cash flow improved to 10.7 billion francs.

Strategic Cost Optimization

Looking ahead to 2025, Nestle has unveiled an ambitious cost-saving initiative targeting 2.5 billion francs in reductions by 2027, with 300 million francs already secured for 2025. These savings will primarily fund enhanced marketing activities as part of the company's growth strategy. Management aims to achieve an operating margin of at least 16% in 2025, with plans to exceed 17% in the medium term. Under normal market conditions, the company expects organic growth to surpass 4%.