Nestlé made tentative progress with a challenging turnaround as it published slightly better-than-expected results for 2024 this week.
The Kit-Kat and Nescafe owner hailed the performance as “solid” given the backdrop of soaring coffee and cocoa commodity costs.
Nestlé registered organic sales growth of 2.7% in the final three months of the year, higher than analyst estimates of 2%.
However, full-year growth of just 2.2% represented a multi-year low for the struggling goliath.
Analysts had feared the Swiss food giant could scrap its margin guidance of 16% for 2025, but Nestlé maintained the forecast for at least that figure. However, it is a drop from the 17.2% recorded in 2024.
Shares soared by more than 6.2% today as a result of the green shoots of optimism that the worst may be over. It left Nestlé up 12% so far in 2025 following a dramatic slump in the share price over the last three years.
New CEO Laurent Freixe, who took over following the surprise departure of Mark Schneider last year, is tasked with turning the Nestlé supertanker around.
“We have a clear roadmap to accelerate performance and transform for the future,” he said this morning.
“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.”
Warren Ackerman of Barclays praised the progress being made but remained cautious.
“There still remain question marks on margins given COGS inflation,” he said.
“The turnaround will take time, but Nestlé is making early progress.”
Nestlé left its guidance for 2025 vague, forecasting for organic sales growth to be above 2024’s 2.2% – with current market consensus sitting at 3.1%.
Russ Mould, investment director at AJ Bell, reckoned the guidance for lower margins in 2025 meant Nestlé would stomach some of the pain of higher costs itself rather than further burden consumers.
“Passing on the full increase in costs via higher prices is a risky move,” he added.
James Jones at RBC was happy with the 2024 results.
“We were nervous coming into these numbers; thankfully we needn’t have been,” he said.
“We think Nestlé’s problems have been as much to do with expectations management as operational management. The fresh CEO/CFO combination seems determined to put that right.”
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