Nestlé (-1.48% to 77.02 Swiss francs) shows one of the biggest drops in the SMI index. However, the agri-food multinational unveiled its action plan during its investor day with a view to achieving sustainable, profitable growth and stimulating “operational excellence”. This plan should enable it to gain market share. In the medium term, organic sales growth should be over 4% “in a normal operating environment”, with an underlying operating profit margin of over 17%.
Through its action plan, Nestlé plans to achieve additional savings of at least 2.5 billion Swiss francs by the end of 2027.
Its investments in advertising and marketing will be increased to 9% of its turnover by the end of 2025 to support growth.
Under the leadership of Muriel Lienau, Head of Nestlé Waters Europe, Nestlé’s premium waters and beverages business will become a standalone global business from January 1, 2025.
Additionally, the owner of the Nescafé and Buitoni brands will also accelerate its digital transformation to “become a real-time, end-to-end connected business, powered by data and artificial intelligence. It further ensures that sustainability is integrated into its activities.
During its investor day, Nestlé confirmed its outlook for 2024: organic sales growth of around 2%, an underlying operating margin of around 17% and underlying earnings per share generally stable at constant exchange rate.
2025: organic growth of 3.4%?
For 2025, Nestlé expects organic sales growth to improve compared to 2024, with the underlying operating margin expected to be moderately lower than the 2024 forecast.
For next year, Visible Alpha’s consensus currently points to an acceleration in organic sales growth of between 2% and 3.4% and a contraction in underlying operating margin of 50 basis points to 16 .5%.
According to UBS, “organic sales growth for next year is estimated at 3.4%, a sequential acceleration compared to the 2% expected for 2024. For 2026 and beyond, the consensus considers that Nestlé is capable of “achieve organic growth of 3.8% and increase its adjusted operating margin in a consistent and moderate manner (around 20 basis points of annual margin improvement between 2026 and 2030)”.
