Latest news with #CHF700
Yahoo
25-07-2025
- Business
- Yahoo
Nestle SA (NSRGF) Q2 2025 Earnings Call Highlights: Navigating Growth Amidst Economic Challenges
Organic Growth: 2.9% in the first half of 2025. UTOP Margin: 16.5%, down 90 basis points. Gross Margin: Decreased by 60 basis points. Pricing: 2.7% increase, with significant increases in confectionery and coffee. RIG (Real Internal Growth): 0.2% in the first half. Advertising and Promotion (A&P): 8.6% of sales in the first half. Fuel for Growth Savings: CHF150 million recognized in H1, targeting CHF700 million for the full year. Net Financing Costs: Slightly higher due to increased average net debt. Underlying Tax Rate: Slightly lower at 22%. Free Cash Flow: Seasonally weaker in H1, impacted by lower EBITDA and higher inventory costs. Net Debt: Increased due to dividend payment, partially offset by CHF2.5 billion from Swiss franc strengthening. Guidance: Full-year UTOP margin expected to be at or above 16%. Warning! GuruFocus has detected 4 Warning Sign with NSRGF. Release Date: July 24, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Positive Points Nestle SA (NSRGF) achieved a 2.9% organic growth in the first half of 2025, with broad-based sales growth across geographies and categories. The company maintained a solid UTOP margin of 16.5% despite increased investments and headwinds from tariffs and foreign exchange. Nestle's Fuel for Growth program is on track, with over CHF350 million in savings expected to benefit the P&L in the second half, aiming for a CHF700 million target for the full year. Nespresso delivered another quarter of solid growth, maintaining positive RIG and benefiting from pricing ahead of commodity increases. Nestle is implementing strategic initiatives such as the Nestle Virtuous Circle and digital transformation to drive growth and improve market share. Negative Points Margins are expected to be significantly lower in the second half due to increased input costs and tariff impacts. Sales were negatively impacted by foreign exchange movements, particularly due to the strengthening of the Swiss franc. The Greater China market experienced a negative impact on RIG due to a reversal of previous sell-in growth, and the company anticipates a headwind for up to a year as it shifts its model. The VMS business faced challenges due to the discontinuation of some private label business and weaker performance in mainstream brands. Free cash flow was lower in the first half, impacted by higher working capital requirements and FX headwinds, raising concerns about its ability to cover dividends. Q & A Highlights Q: What is your guidance for COGS inflation for this year, and how does it impact pricing strategies, particularly in categories like Coffee and Confectionery? A: Laurent Freixe, CEO, explained that the company faces unprecedented commodity price increases, necessitating pricing actions. Most of these actions have been implemented, and while there might be slight additional adjustments, the majority of pricing changes are already in place. Anna Manz, CFO, added that COGS inflation is expected to remain high single digits for the full year, with efficiencies offsetting some of the impact. Tariffs are expected to have a small impact, estimated at a couple of tens of basis points for the group. Q: Can you elaborate on the strategic reset in Greater China and its expected impact on growth? A: Laurent Freixe, CEO, stated that the strategic reset in China involves rebalancing the focus from distribution to consumer demand, aligning with the government's agenda to support consumption. This adjustment is necessary due to the current deflationary environment and will have a controlled impact over the next quarters. The company is confident in its leadership and market position in China, expecting strong performance once adjustments are made. Q: How is Nestle addressing the challenges in the VMS segment, and what is the scope of the strategic review? A: Laurent Freixe, CEO, mentioned that the focus will be on premium brands like Garden of Life, Solgar, and Pure Encapsulations, which align with Nestle Health Science's strategic goals. The review includes mainstream and value brands, potentially leading to divestments. The non-strategic brands under review represent about CHF1.2 billion in revenue with low single-digit profit margins. Q: What are the current trends and competitive dynamics in the PetCare category, particularly in the US? A: Laurent Freixe, CEO, emphasized the strong fundamentals of the PetCare category, driven by demographic trends like aging populations and urbanization. While there is little input cost inflation, the category remains healthy with significant growth potential. The company is focused on premiumization and innovation to drive future growth. Q: How is Nestle managing its free cash flow and working capital, given the challenges in the first half of the year? A: Anna Manz, CFO, acknowledged the lower free cash flow in H1 due to margin reductions, FX headwinds, and working capital outflows. The company is focused on managing inventory levels and driving efficiencies to improve cash flow. While cash flow is expected to be lower this year, Nestle remains on track to deliver good cash flow, subject to commodity price movements. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus.
Yahoo
10-05-2025
- Business
- Yahoo
Nestle to Raise Prices of Some US Chocolate on High Cocoa Costs
(Bloomberg) -- Nestle USA is increasing prices for some chocolate products due to commodity costs, a sign that sweet treats will stay expensive for consumers in the near term. As Trump Reshapes Housing Policy, Renters Face Rollback of Rights Is Trump's Plan to Reopen the Notorious Alcatraz Prison Realistic? What's Behind the Rise in Serious Injuries on New York City's Streets? NYC Warns of 17% Drop in Foreign Tourists Due to Trump Policies Vail to Borrow Muni Debt to Ease Ski Resort Town Housing Crunch The US division of Nestle SA, the world's largest food company, will raise prices of its Toll House morsels, baking cocoa and fudge kits starting June 23, according to a memo viewed by Bloomberg News. The hikes follow letters sent from the company at the end of last year to some of its commodity suppliers in which Nestle asked them to reduce prices, provide rebates and in some cases even cancel supply contracts altogether, according to people familiar with the matter who asked not to be identified because the information is private. Some suppliers declined to do so, according to the people. The letters were specific to each supplier and detailed what the company wanted for a number of products it buys, including sugar and coffee, the people said. Prices for chocolate and some food items are still rising even as overall grocery inflation moderates. Tight supply pushed up cocoa futures to a record late last year, prompting price hikes, which are testing consumers' appetite to pay up for snacks. Nestle and its rivals have faced surging cocoa and coffee costs over the past year, prompting price increases to protect margins. Those hikes were the main driver of Nestle's better-than-expected sales growth in the first quarter, with Chief Executive Officer Laurent Freixe saying the Swiss group is taking 'as much price as we can to cover our costs while being mindful of the consumer response in a competitive environment.' Nestle will communicate specific price changes to products at a later date, according to the memo. Price changes for consumers will be decided by retailers, which weigh a range of factors including competition. The Toll House price increases come after 'exhausting efforts to offset aggravations due to increased commodity costs,' according to Nestle's memo. The changes aren't due to recent tariffs, the company said in the memo. Nestle is seeking to deliver CHF700 million ($843.6 million) in cost savings in 2025, primarily through procurement. A Nestle spokesperson said there's been a significant rise in cocoa costs over the last two years and the company is implementing price increases after careful consideration of the macroeconomic environment and efforts to navigate higher costs. No additional cocoa products will be affected at this time. New York cocoa futures soared last year to a record near $13,000 a ton, as poor weather and disease hit crops in West Africa. While prices are now down about 30% from the peak on expectations of a small surplus, cocoa is still far costlier than historical levels. Arabica coffee futures also reached a record earlier this year, as dry weather hurt top grower Brazil's output. Economists, investors and companies are keeping an extra-close eye on prices following years of higher inflation that have reduced the purchasing power of some consumers. Expansive, fast-changing tariffs from US President Donald Trump are expected to further increase prices of some goods. US consumer confidence dropped in April to an almost five-year low due to growing pessimism about the economy and the labor market. Related: Mondelez Says Wary US Shoppers Are Cutting Back on Snacks Nestle has been struggling in North America, which was one of the company's weakest-performing regions in the first quarter. It was also one of the few areas where average prices declined. The Swiss food company lost market share as inflation-wary consumers turned to cheaper alternatives — something that CEO Freixe has pledged to ease by cutting prices on products such as frozen pizzas in the US. Sweets, coffee and eggs are among items that are outpacing overall grocery inflation of low single digits, according to US government data. Average unit prices of US chocolates have risen about 18% to $3.45 for the 4 weeks ended April 19, compared with two years earlier, according to research firm NIQ. Higher chocolate prices have dented volume for some food companies as consumers stay cost-conscious. Hershey Co. said earlier this month that prices of everyday chocolates are up 8% year-to-date while volume is down 4.5%. Meanwhile, Mondelez International Inc. said recently it's reconfiguring its chocolate business to offer a range of pack sizes while keeping prices low for certain key products. --With assistance from Ilena Peng. US Border Towns Are Being Ravaged by Canada's Furious Boycott Maybe AI Slop Is Killing the Internet, After All How the Lizard King Built a Reptile Empire Selling $50,000 Geckos Pre-Tariff Car Buying Frenzy Leaves Americans With a Big Debt Problem With the New York Liberty, Clara Wu Tsai Aims for the First $1 Billion Women's Sports Franchise ©2025 Bloomberg L.P. Sign in to access your portfolio
Yahoo
09-05-2025
- Business
- Yahoo
Nestle to Raise Prices of Some US Chocolate on High Cocoa Costs
(Bloomberg) -- Nestle USA is increasing prices for some chocolate products due to commodity costs, a sign that sweet treats will stay expensive for consumers in the near term. Is Trump's Plan to Reopen the Notorious Alcatraz Prison Realistic? As Trump Reshapes Housing Policy, Renters Face Rollback of Rights Vail to Borrow Muni Debt to Ease Ski Resort Town Housing Crunch NYC Warns of 17% Drop in Foreign Tourists Due to Trump Policies What's Behind the Rise in Serious Injuries on New York City's Streets? The US division of Nestle SA, the world's largest food company, will raise prices of its Toll House morsels, baking cocoa and fudge kits starting June 23, according to a memo viewed by Bloomberg News. The hikes follow letters sent from the company at the end of last year to some of its commodity suppliers in which Nestle asked them to reduce prices, provide rebates and in some cases even cancel supply contracts altogether, according to people familiar with the matter who asked not to be identified because the information is private. Some suppliers declined to do so, according to the people. The letters were specific to each supplier and detailed what the company wanted for a number of products it buys, including sugar and coffee, the people said. Prices for chocolate and some food items are still rising even as overall grocery inflation moderates. Tight supply pushed up cocoa futures to a record late last year, prompting price hikes, which are testing consumers' appetite to pay up for snacks. Nestle and its rivals have faced surging cocoa and coffee costs over the past year, prompting price increases to protect margins. Those hikes were the main driver of Nestle's better-than-expected sales growth in the first quarter, with Chief Executive Officer Laurent Freixe saying the Swiss group is taking 'as much price as we can to cover our costs while being mindful of the consumer response in a competitive environment.' Nestle will communicate specific price changes to products at a later date, according to the memo. Price changes for consumers will be decided by retailers, which weigh a range of factors including competition. The Toll House price increases come after 'exhausting efforts to offset aggravations due to increased commodity costs,' according to Nestle's memo. The changes aren't due to recent tariffs, the company said in the memo. Nestle is seeking to deliver CHF700 million ($843.6 million) in cost savings in 2025, primarily through procurement. A Nestle spokesperson said there's been a significant rise in cocoa costs over the last two years and the company is implementing price increases after careful consideration of the macroeconomic environment and efforts to navigate higher costs. No additional cocoa products will be affected at this time. New York cocoa futures soared last year to a record near $13,000 a ton, as poor weather and disease hit crops in West Africa. While prices are now down about 30% from the peak on expectations of a small surplus, cocoa is still far costlier than historical levels. Arabica coffee futures also reached a record earlier this year, as dry weather hurt top grower Brazil's output. Economists, investors and companies are keeping an extra-close eye on prices following years of higher inflation that have reduced the purchasing power of some consumers. Expansive, fast-changing tariffs from US President Donald Trump are expected to further increase prices of some goods. US consumer confidence dropped in April to an almost five-year low due to growing pessimism about the economy and the labor market. Related: Mondelez Says Wary US Shoppers Are Cutting Back on Snacks Nestle has been struggling in North America, which was one of the company's weakest-performing regions in the first quarter. It was also one of the few areas where average prices declined. The Swiss food company lost market share as inflation-wary consumers turned to cheaper alternatives — something that CEO Freixe has pledged to ease by cutting prices on products such as frozen pizzas in the US. Sweets, coffee and eggs are among items that are outpacing overall grocery inflation of low single digits, according to US government data. Average unit prices of US chocolates have risen about 18% to $3.45 for the 4 weeks ended April 19, compared with two years earlier, according to research firm NIQ. Higher chocolate prices have dented volume for some food companies as consumers stay cost-conscious. Hershey Co. said earlier this month that prices of everyday chocolates are up 8% year-to-date while volume is down 4.5%. Meanwhile, Mondelez International Inc. said recently it's reconfiguring its chocolate business to offer a range of pack sizes while keeping prices low for certain key products. --With assistance from Ilena Peng. US Border Towns Are Being Ravaged by Canada's Furious Boycott Maybe AI Slop Is Killing the Internet, After All Pre-Tariff Car Buying Frenzy Leaves Americans With a Big Debt Problem What the US Would Lose If Trump Pushes Out Legal Immigrants How the Lizard King Built a Reptile Empire Selling $50,000 Geckos ©2025 Bloomberg L.P.
