Latest news with #LaurentFreixe
Time of India
25-07-2025
- Business
- Time of India
Nestle to review vitamins business as H1 organic sales beat forecast
Nestle posted better-than-expected first-half organic sales growth on Thursday as the world's biggest packaged food company announced a strategic review of its vitamins business that could lead to the divestment of some brands. The Swiss company maintained its 2025 outlook, saying it still expects organic sales growth to improve and estimates an underlying trading operating profit margin at or above 16%. Nestle's results may ease investor pressure on CEO Laurent Freixe, who was appointed a year ago to revive the company's share price and sales after the business struggled following the pandemic. The company's share price has risen around 4% this year but lagged rivals like Unilever and Danone since Freixe's appointment in August last year. Nestle, the maker of KitKat chocolate bars, Nespresso coffee and Maggi seasoning recently announced that Chairman Paul Bulcke would step down. Reuters reported the decision followed rising investor unease over the tenure of Freixe's predecessor and concern about the firm's corporate governance model. Organic sales growth, which excludes the impact of currency movements and acquisitions, rose 2.9% in the six months through June, Nestle said, just above analysts' average forecast of 2.8%. Total reported sales decreased by 1.8% to 44.2 billion Swiss francs ($55.8 billion), compared to analyst expectations of 44.6 billion francs. Nestle said this included the negative impact of 4.7% from foreign exchange, given the Swiss franc's significant strengthening. Freixe said in a statement that Nestle was taking steps to address underperforming business cells and was focussing on winning premium brands in the Vitamins, Minerals and Supplements business. "We have launched a strategic review of our underperforming mainstream and value brands, including Nature's Bounty, Osteo Bi-Flex, Puritan's Pride, and U.S. private label, which may result in the divestment of these brands," Nestle said. Nestle's 2.7% price increases were above the average analyst estimate of 2.5%. Real internal growth - or sales volumes - rose 0.2% versus expectations for a 0.4% increase.
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.
Leader Live
24-07-2025
- Business
- Leader Live
Nestle sees lower customer demand after hiking coffee and chocolate prices
The KitKat and Nescafe maker revealed that sales growth was almost entirely driven by higher pricing, as it passed inflation in its supply chain on to customers. The Swiss consumer group reported organic growth of 2.9% over the first half of the year, compared with a year earlier. It said this was driven by a 2.7% increase in pricing, while it saw real internal growth of 0.2%. This included a 3.3% increase in prices in the second quarter as sales volumes declined marginally amid pressure on customer finances. The company said this came as it 'took actions to address input cost inflation in coffee and cocoa-related categories'. Confectionery prices increased by 10.6% over the half-year, while coffee prices rose by 6%. Sales volumes were only marginally higher over the quarter as Nestle reported 'lower consumer demand' as shoppers were 'adjusting to price increases'. It came as Nestle also announced a review into the future of the vitamins business its previous boss bought in 2021. The company has indicated it could sell off its mainstream vitamins and supplements division, which includes the Nature's Bounty and Puritan's Pride brands. Laurent Freixe, Nestle chief executive, said: 'We are executing our strategy to accelerate performance and transform for the future. 'We are accelerating our category growth and improving our market share, through better execution and increased investment, funded through a relentless pursuit of efficiency. 'These actions are already delivering results, with broad-based growth and a robust profit performance in the first half.'
South Wales Guardian
24-07-2025
- Business
- South Wales Guardian
Nestle sees lower customer demand after hiking coffee and chocolate prices
The KitKat and Nescafe maker revealed that sales growth was almost entirely driven by higher pricing, as it passed inflation in its supply chain on to customers. The Swiss consumer group reported organic growth of 2.9% over the first half of the year, compared with a year earlier. It said this was driven by a 2.7% increase in pricing, while it saw real internal growth of 0.2%. This included a 3.3% increase in prices in the second quarter as sales volumes declined marginally amid pressure on customer finances. The company said this came as it 'took actions to address input cost inflation in coffee and cocoa-related categories'. Confectionery prices increased by 10.6% over the half-year, while coffee prices rose by 6%. Sales volumes were only marginally higher over the quarter as Nestle reported 'lower consumer demand' as shoppers were 'adjusting to price increases'. It came as Nestle also announced a review into the future of the vitamins business its previous boss bought in 2021. The company has indicated it could sell off its mainstream vitamins and supplements division, which includes the Nature's Bounty and Puritan's Pride brands. Laurent Freixe, Nestle chief executive, said: 'We are executing our strategy to accelerate performance and transform for the future. 'We are accelerating our category growth and improving our market share, through better execution and increased investment, funded through a relentless pursuit of efficiency. 'These actions are already delivering results, with broad-based growth and a robust profit performance in the first half.'
South Wales Argus
24-07-2025
- Business
- South Wales Argus
Nestle sees lower customer demand after hiking coffee and chocolate prices
The KitKat and Nescafe maker revealed that sales growth was almost entirely driven by higher pricing, as it passed inflation in its supply chain on to customers. The Swiss consumer group reported organic growth of 2.9% over the first half of the year, compared with a year earlier. It said this was driven by a 2.7% increase in pricing, while it saw real internal growth of 0.2%. Nestle said confectionery prices rose by 10.6% over the quarter (Dominic Lipinski/PA) This included a 3.3% increase in prices in the second quarter as sales volumes declined marginally amid pressure on customer finances. The company said this came as it 'took actions to address input cost inflation in coffee and cocoa-related categories'. Confectionery prices increased by 10.6% over the half-year, while coffee prices rose by 6%. Sales volumes were only marginally higher over the quarter as Nestle reported 'lower consumer demand' as shoppers were 'adjusting to price increases'. It came as Nestle also announced a review into the future of the vitamins business its previous boss bought in 2021. The company has indicated it could sell off its mainstream vitamins and supplements division, which includes the Nature's Bounty and Puritan's Pride brands. Laurent Freixe, Nestle chief executive, said: 'We are executing our strategy to accelerate performance and transform for the future. 'We are accelerating our category growth and improving our market share, through better execution and increased investment, funded through a relentless pursuit of efficiency. 'These actions are already delivering results, with broad-based growth and a robust profit performance in the first half.'
