Nestlé strong in Europe despite decline in key areas

Despite delivering better-than-expected results on some fronts, Nestlé has seen a decline on several key metrics in its Q4 and full year results today.

Organic sales grew 2.2%, above the 2% the company had projected in its Q3 results. This is despite ‘soft’ consumer demand. “Sentiment is stabilised but remains fragile,” said Anna Manz, the company’s CFO, who does not expect sentiment to materially change in 2025.

For example, consumer hesitancy towards global brands has had a negative impact on growth of 40 bps. She predicts this will change in 2025.

Yet Nestlé’s earnings per share (EPS), both basic and underlying, declined significantly. This was due to the impact of the share buyback programme.

Net profit and underlying net profit also declined due to, according to Nestlé, adverse foreign exchange movements, with the Swiss Franc being strengthened.

Following the release of the results, Nestlé’s share price increased by approximately CHF 5.

Stronger in Europe

The company’s growth was driven by Europe and emerging markets.

In Europe, the growth was largely down to pricing, which reflected the inflationary environment for coffee and confectionery. Reported sales increased by around 1%.

Europe’s organic growth of 3.3% and RIG of 0.8% contrasts with a decline of 0.5% in organic growth and 0.8% in RIG for North America, a decline driven by a ‘challenging consumer environment,’ with coffee creamers and frozen food particular areas of concern.

Did Nestlé weather commodity price rises?

Along with pet care, coffee and confectionery were the key driver of growth, both reporting mid-single digit growth, despite the skyrocketing coffee and cocoa prices globally.

The company’s guidance for 2025 is unchanged, despite recent commodity price increases. Organic sales growth is expected to improve.

This comes after Mondelēz International reported a projected 10% fall in EPS due to cocoa prices, a larger-than-expected decrease.

Because it is only coffee and cocoa rapidly increasing, rather than a whole host of commodities as in previous inflationary times, CFO Manz suggests that the company is well positioned in this area. There is also less cost in the coffee areas, portioned and soluble, that Nestlé works than categories like roasted and ground.

Nevertheless, growth profit margins decreased in the second half of the year, and Manz predicts that gross profit margin will be lower in 2025.

Manz predicts that the company will be taking price on key commodities.

Could tariffs impact the company?

Projected tariffs from the US on a wide range of goods have sent business into a tailspin, with many fearing potential consequences.

According to Laurent Freixe, the company’s CEO, Nestlé has a good position on tariffs as in many of their markets, as it often sells products within the territory in which it is created.

For example, 90% its US-sold products are made in the US, and 90% of its Chinese-sold products are made in China. Thus, tariff barriers are less of an issue for the company.