SWITZERLAND – Nestle SA has once again trimmed its fiscal 2024 outlook following weaker consumer demand and inventory cutbacks, as revealed by new global CEO Laurent Freixe during the company’s nine-month sales report.
The Vevey, Switzerland-based giant reported a 2.4% decline in sales to 67.15 billion Swiss francs (US$77.5 billion) from 68.83 billion Swiss francs a year earlier.
This decline was mainly driven by negative foreign exchange impacts (4.1%) and net divestitures (0.3%).
However, organic sales saw a modest growth of 2%, with real internal growth (RIG) of 0.5% and a 1.6% price uptick over the nine months, and a 1.9% growth for the third quarter.
Freixe noted that Nestle delivered steady organic sales growth, despite the challenging environment marked by softening consumer demand and inventory reduction across various regions.
“Consumer demand has been subdued across many of our regions,” said Freixe. “In the third quarter, we saw softening demand and actions to reduce customer inventory levels.”
He attributed the company’s organic growth this year to pricing normalization after unprecedented increases over the last two years.
Nestle had initially lowered its full-year forecast in July, reducing the anticipated organic sales growth from around 4% to at least 3%, amid growing economic uncertainty.
CFO Anna Manz confirmed the revised outlook, stating, “We have delivered 2% organic growth in the first nine months, and we now expect full-year organic growth also to be around 2%.”
Nestle’s Zone North America saw reported sales fall by 2.6% to 18.52 billion Swiss francs (US$21.39 billion) from 19.03 billion Swiss francs a year earlier.
Organic sales in the region dipped 0.3%, as pricing increased by 0.6%, while RIG declined by 0.9%, though it turned positive in the third quarter, thanks to strong e-commerce growth and specialty channels. Foreign exchange had a negative impact of 2.3%.
In terms of product categories, low-single-digit sales growth was recorded for pet care and water, with notable momentum from S. Pellegrino and the launch of Maison Perrier.
Starbucks and Nescafe led beverage growth, while Toll House baking products bolstered mid-single-digit confectionery sales. However, frozen food and infant nutrition both saw sales declines due to intense competition, particularly in the frozen pizza segment.
Manz emphasized Nestle’s continued focus on innovation and marketing across categories, especially in the pet care, coffee, and water segments. The company also introduced new frozen food products, such as Vital Pursuits, which began hitting the market at the end of the third quarter.
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