Latest news with #Nestle
Time of India
9 hours ago
- 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.
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Business Standard
10 hours ago
- Business
- Business Standard
Nestle shares slip 7% in two days of posting Q1; what should investors do?
Nestle India Q1 results review: The fast-moving consumer goods (FMCG) major Nestle shares slipped 2 per cent on Friday, logging an intra-day low of ₹2,269.85 per share on the BSE. The stock fell nearly 7 per cent in two days after the company posted its Q1 numbers on Thursday, during market hours. At 9:40 AM, Nestle share price was trading 0.85 per cent lower at ₹2,300.4 per share on BSE. In comparison, BSE Sensex was down 0.35 per cent at 81,898.93. The market capitalisation of the company stood at ₹2,22,064.68 crore. Nestle Q1FY26 results Nestle, in the first quarter of FY26 (Q1FY26), reported a 13 per cent decline in the consolidated net profit Y-o-Y to ₹646.6 crore, as compared to ₹746.6 crore. However, its revenue from operations grew 5.8 per cent to ₹5,096 crore, from ₹4,814 crore a year ago. The company reported an Earnings before interest, tax, depreciation, and amortisation (Ebitda) at ₹34.2 crore, as compared to ₹21.3 crore, up 60.3 per cent Y-o-Y. However, Ebitda margins stood at 24.8 per cent, as against 26.5 per cent. Brokerage view on Nestle India Most brokerages have cut their target price on Nestle India stock on higher inflation concerns, and elevated depreciation/finance costs due to higher capital expenditure. ICICI Securities has maintained a 'Hold' on Nestle and has cut the target to ₹2,400 per share from ₹2,500. Nestle reported a stable quarter, according to the brokerage; however, the largest category, milk products and nutrition, appeared to be the problem child. E-commerce salience at 12.5 per cent of revenue is good and could create a material unlocking opportunity if executed well, noted ICICI Securities. The brokerage said it will remain watchful of new growth vectors under Manish Tiwary, new CMD, effective August 1. 'Nestle India requires a strategy and execution refresh,' the brokerage note read. Nuvama Institutional Equities has maintained a 'Buy' rating, but has cut the target to ₹2,820 per share from ₹2,825. The brokerage also lowered its FY26E/27E earnings per share (EPS) estimates by 6.8 per cent/4.1 per cent, as its sees depreciation/finance cost to remain elevated due to higher capex. Motilal Oswal maintained a 'Neutral' rating with a target of ₹2,400 per share. According to the brokerage, going forward, the volume growth is expected to be in low single digits. Further, even though the capacity expansion will drive long-term growth, short-term margin pressure is expected to stay. Macquaire also continued with a 'Neutral' rating on the stock and cut the target to ₹2,250 per share from ₹2,375, according to reports. The global brokerage sees near-term growth headwinds for Nestle as management commentary suggested milk and nutrition sales, the largest category of the company, are yet to recover and sees benign coffee prices hurting pricing growth in the beverages segment ahead.
Yahoo
11 hours ago
- 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.
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Business Standard
14 hours ago
- Business
- Business Standard
Nestle Q1: What should your investment strategy be? Brokerages decode
Nestle India Q1 results review: The fast-moving consumer goods (FMCG) major Nestle reported its June quarter (Q1FY26) results on Thursday, during market hours. Post the result release, the stock fell and closed 5.4 per cent lower at ₹2,320.15 per share on BSE. The selling pressure was on the counter as the company's net profit slipped 13 per cent year-on-year (Y-o-Y) to ₹647 crore. Nestle Q1FY26 results Nestle, in the first quarter of FY26 (Q1FY26), reported a 13 per cent decline in the consolidated net profit Y-o-Y to ₹646.6 crore, as compared to ₹746.6 crore. However, its revenue from operations grew 5.8 per cent to ₹5,096 crore, from ₹4,814 crore a year ago. Brokerage view on Nestle India Most brokerages have cut their target price on Nestle India stock on higher inflation concerns, and elevated depreciation/finance costs due to higher capital expenditure. ICICI Securities has maintained a 'Hold' on Nestle and has cut the target to ₹2,400 per share from ₹2,500. Nestle reported a stable quarter, according to the brokerage; however, the largest category, milk products and nutrition, appeared to be the problem child. E-commerce salience at 12.5 per cent of revenue is good and could create a material unlocking opportunity if executed well, noted ICICI Securities. The brokerage said it will remain watchful of new growth vectors under Manish Tiwary, new CMD, effective August 1. 'Nestle India requires a strategy and execution refresh,' the brokerage note read. Nuvama Institutional Equities has maintained a 'Buy' rating, but has cut the target to ₹2,820 per share from ₹2,825. The brokerage also lowered its FY26E/27E earnings per share (EPS) estimates by 6.8 per cent/4.1 per cent, as its sees depreciation/finance cost to remain elevated due to higher capex. Motilal Oswal maintained a 'Neutral' rating with a target of ₹2,400 per share. According to the brokerage, going forward, the volume growth is expected to be in low single digits. Further, even though the capacity expansion will drive long-term growth, short-term margin pressure is expected to stay. Macquaire also continued with a 'Neutral' rating on the stock and cut the target to ₹2,250 per share from ₹2,375, according to reports. The global brokerage sees near-term growth headwinds for Nestle as management commentary suggested milk and nutrition sales, the largest category of the company, are yet to recover and sees benign coffee prices hurting pricing growth in the beverages segment ahead.
The Star
21 hours ago
- Business
- The Star
Nestle confident of profit upswing in 2H25
Nestle (M) Bhd chief executive officer Juan Aranols. PETALING JAYA: Nestle (M) Bhd , which recorded earnings growth in the second quarter of financial year ended June 30, 2025 (2Q25), remains upbeat on its outlook for the second half of financial year 2025 (2H25), supported by sustained brand strength, digitalisation and cost optimisation to drive profit recovery despite ongoing market headwinds. Chief executive officer Juan Aranols said the company is confident that these efforts will continue to underpin growth and support recovery in the months ahead. 'As we navigate through 2H25, we remain confident in our ability to drive solid growth momentum and profit recovery through the coming quarters,' he noted in a statement. He said while the company remains 'mindful and vigilant of the geopolitical uncertainties that may impact the business environment in Malaysia,' it is well-positioned to stay resilient by accelerating digitalisation and boosting efficiencies to fund brand investments and innovation. 'We will further accelerate our journey through rapid digitalisation and pursuing efficiencies that fuel brand investments and innovations to strengthen market leadership,' he said. For 2Q25, Nestle's revenue rose 9.5% year-on-year to RM1.67bil from RM1.52bil, while net profit surged 19.8% to RM112.11mil from RM93.6mil. The growth was underpinned by broad-based brand performance and continued momentum from festive campaigns in the previous quarter. 'Alongside domestic sales, the company's export business also accelerated, confirming Nestle's international competitiveness while continuing to leverage its role as the largest halal manufacturing hub for the Nestle group worldwide,' the statement noted. For 1H25, revenue rose 4% to RM3.44bil from RM3.31bil in the same period last year, although net profit dipped 5.4% to RM273.45mil from RM289.11mil. Nestle attributed its performance to margin management amid persistent volatility in commodity prices, 'through the systematic application of the Nestle Virtuous Circle framework.' 'This approach emphasises a relentless focus on efficiency and cost optimisation to fund brand investments that drive growth and market share gains,' it noted. 'The profit improvement also reflects solid top-line recovery, supported by a prudent approach to pricing amid cost increases,' the company said. Aranols said the 2Q25 results validated the group's earlier guidance of returning to healthy growth in the 1H25. 'Amid market volatility and intense competition, we continued to drive strong brand plans with effective execution across all sales channels,' he added. Nestle declared a first interim dividend of 70 sen per share during the quarter – unchanged from a year ago. Throughout the quarter, the company maintained its focus on the key drivers of consumer preference for its brands and product offerings – particularly quality, taste and nutritional relevance. 'In combination with its wide distribution network and best-in-class commercial execution, the company's core products performed well, complemented by product innovations that have been positively received by consumers, helping to sustain market leadership positions,' it added. Nestle's shares closed 7% higher yesterday, up RM5.42 to RM82.32.
