Nestle cut its 2025 profitability target and said it would step up advertising and marketing investment as part of Chief Executive Laurent Freixe's plan to revive sales growth at the Swiss food giant.
The maker of KitKat chocolate bars and Nescafe coffee said Tuesday that it would target measures to deliver 2.5 billion Swiss francs ($2.83 billion) in additional cost savings by the end of 2027 to help fund higher investment.
Investment in advertising and marketing is expected to amount to 9% of sales by the end of next year, Nestle said.
The company said that, as a result, it expected an underlying trading operating profit margin for 2025 moderately lower than its 2024 guidance, which puts the figure for this year at about 17%.
At its previous mid-term update in 2022, Nestle set out a target of an underlying trading operating profit margin of 17.5% to 18.5% by 2025, with organic sales growth in the mid single-digit percentage range.
Over the medium term, Nestle said it expects organic sales growth of more than 4% and an underlying trading operating profit margin of more than 17%.
The company said its water and premium beverages segment activities will become a global standalone business as of Jan. 1 and that it will be led by Muriel Lienau, currently head of Nestle Waters Europe.
Nestlé S.A. is the world's leading agri-food group. Net sales break down by category of products as follows:
- powdered and liquid beverages (26.9%): soluble coffees (Nescafé and Starbucks brands), coffee in capsules (Nespresso), chocolate drinks (Nesquik, Milo, etc.), tea drinks (Nestea), etc.;
- pet food (20.7%): brands such as Purina, Friskies, Felix, etc.;
- pharmaceutical, nutrition and well-being products (16.6%): nutritional supplements (Resource, Boost, Nutren, Optifast, Peptamen brands, etc.), infant and maternal nutrition products (NAN, illuma, Cerelac, Nido, Gerber), ketogenic beverages (BrainXpert), (Nesquick, Fitness, Cheerios, Lion, etc.), etc.;
- ready meals and seasoning products (11.7%): frozen and chilled dishes (Lean Cuisine, Hot Pockets and Stouffer's brands), soups (Maggi), etc.;
- dairy products and ice cream (11.4%): powdered milk, sweetened condensed milk, yoghurt and cream desserts, ice cream (Nido, Nesvita, Carnation, La Laitière, Coffee Mate, Nestlé Ice Cream, Dreyers, Häagen-Dazs, Extrême brands, etc.);
- chocolates, sweets and biscuits (9.2%): Kit Kat, Smarties, Cailler, Terrafertil, etc. brands;
- bottled waters (3.5%): Nestlé Pure Life, Vittel, Perrier, S. Pellegrino, etc. brands.
Net sales are distributed geographically as follows: Switzerland (1.2%), the United Kingdom (4%), France (3.8%), Germany (2.2%), Europe (13.1%), the United States and Canada (35.2%), China (5.9%), Brazil (4.4%), Mexico (4.2%), Chile (1.2%), Latin America (3.8%), Philippines (2.9%), India (2.2%), Australia (1.6%) and Oceania (14.3%).
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