Swiss food giant Nestle posted stronger-than-forecast annual sales on Thursday, causing its shares to rise after the company behind Nescafe coffee, KitKat chocolate, and Purina dog food increased prices to counteract inflation.
Shares in the group, which includes various well-known brands such as Maggi bouillon cubes, Gerber baby food, and Nesquik chocolate-flavored drink, rose almost six percent in Zurich following the release of its 2024 financial results.
In a difficult economic environment and with consumers being cautious, we delivered a strong performance in 2024, as expected, our chief executive, Laurent Freixe, noted in a statement.
Freixe took over in September in a surprise change at the top of the Swiss group, which had faced declining sales and scandals related to its bottled water products.
A longtime company executive who previously oversaw the Latin America division, Freixe has made it a priority to drive growth at a company whose products span a wide range of categories, including frozen foods, sweets, and health care nutrition.
Consumers opted for more affordable alternatives as Nestle increased its prices in response to rising inflation.
The group has also faced scandals in Switzerland and France over the use of prohibited filtering systems for its mineral waters, and the deaths of two children who allegedly consumed Buitoni pizzas suspected of being contaminated with E.coli.
The company's stock price dropped significantly last year, sparking worries in Switzerland since pension funds heavily invest in Nestle.
'Moving in right direction'
Nestle stated that its real internal growth (RIG) -- a measure of sales volume, excluding the impact of price increases and acquisitions or divestitures -- reached 0.8 percent in 2024, following a significant acceleration to 1.4 percent in the second half of the year.
It decreased by 0.3 percent in 2023.
"We consider the FY24 results to be a significant turning point, despite the current difficult environment," Jean-Philippe Bertschy, an analyst at investment firm Vontobel, stated in a note.
Nestle reported a sales revenue decline of 1.8 percent to 91.3 billion Swiss francs, which exceeded the 91 billion francs predicted by analysts polled by the Swiss financial news outlet AWP.
Its profit after tax declined 2.9 percent to 10.9 billion francs, which was less than the 11 billion francs forecast by analysts.
Nestle reported organic growth, a key sales metric that disregards currency fluctuations and acquisitions, reached 2.2 percent, surpassing the two-percent forecast set by the company.
In November, Freixe announced cost-cutting measures, a boost in advertising spending on top-selling products and a restructuring of Nestle's water division.
"We are seeing the plans we presented at our capital market day start to take shape," Freix said Thursday in a conference call.
It will take time to bring about change," he said. "You will see Nestle heading in the right direction.