Thu, Feb 22nd 2024
Nestlé’s marginal Q4 recovery fails to offset a year marred by shrinking volumes, inflationary pressures, and complex supply constraints, culminating in a 1.5% dip in annual sales to 93.0 billion Swiss francs.
Nestlé turned it around in the last quarter of 2023; the food giant sold more products after volumes had previously shrunk for five consecutive quarters.
Real internal growth, comprised of sales volume and mix effects, amounted to +0.4 percent in the final quarter.
However, the real internal growth is still down 0.3 percent for the year after the three negative previous quarters. The unprecedented wave of inflation over the past two years has weighed on consumers, said Nestlé CEO Mark Schneider. However, Nestlé has increased its investments in marketing and other growth drivers.
Nevertheless, the food giant recorded organic growth of 7.2 percent. According to the press release, price increases of 7.5 percent also contributed to growth. According to the press release, organic growth was broad-based across most regions and categories.
Purina’s pet care products once again proved to be the driving force, but confectionery and beverages also made strong gains. Meanwhile, Nestlé was only able to grow with water thanks to price increases.
Nevertheless, sales of the world’s largest food group fell by 1.5 percent to 93.0 billion Swiss francs. The strength of the Swiss franc has dampened turnover by over 7%.
Capacity bottlenecks and a temporary restriction in the supply of vitamins, minerals, and food supplements had a negative impact. These lasted longer than expected, as the problem was more extensive and complex than originally assumed. Nestlé now expects the supply bottlenecks to be resolved by the end of the first half of the year.
Nestlé became slightly more profitable in 2023. Although operating profit (EBIT) fell by 0.3% to CHF 16.1 billion, the corresponding margin of 17.3% was slightly higher than in the previous year (17.1%).
On balance, the Group earned 11.2 billion francs. That is an increase of 20.9 percent. In 2022, however, value adjustments of 2.7 billion francs still had a significant impact on the net result.
The company now intends to pay its shareholders a dividend of CHF 3.00 per share, up from CHF 2.95 in the previous year. Nestlé is thus remaining true to its policy of constantly increasing dividends: this is the 29th consecutive dividend increase.
Meanwhile, the medium-term targets for 2025 are confirmed. The underlying operating profit margin is expected to increase between 17.5% and 18.5%. The underlying earnings per share are expected to increase by between 6% and 10% at constant exchange rates.
It’s being claimed by cash.ch that there is a mountain of foreign short sellers betting against Nestle’s results. With these confused and underwhelming statistics coming out of Nestle the short term does not look good. Marketing maybe their only way out.
©Keystone/SDA
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