Nestlé (NESN) H2 2024 earnings summary

Executive summary

• 2024 results met or slightly exceeded guidance, with 2.2% organic growth, 0.8% RIG, and 1.5% pricing; underlying EPS grew 2.5%.

• Strategic transformation accelerated, including organizational restructuring, operational excellence, and portfolio optimization.

• CHF 2.5 billion 'Fuel for Growth' cost savings program launched, targeting savings by 2027 with over CHF 300 million secured for 2025.

• Organization realigned with simplified reporting lines, digital and sustainability priorities, and standalone global businesses for Waters and premium beverages.

• Sustainability progress includes a 20% net reduction in greenhouse gas emissions and 21% of ingredients from regenerative agriculture.

Financial highlights

• Organic sales growth of 2.2% in 2024, with RIG at 0.8% and pricing at 1.5%.

• UTOP margin at 17.2%, down 10 bps vs. 2023, flat in constant currency; gross profit margin up 80 bps to 46.7%.

• Free cash flow improved by CHF 0.9 billion to CHF 10.7 billion, adjusted for the Prometheus Biosciences sale.

• Reported sales declined by 1.8% to CHF 91.4 billion, impacted by FX and M&A.

• Net profit fell 2.9% to CHF 10.9 billion; basic EPS down 1.0% to CHF 4.19.

Outlook and guidance

• 2025 guidance unchanged, targeting organic sales growth above 4% and UTOP margin at or above 16%.

• Medium-term guidance aims for organic growth above 4% and UTOP margin above 17%.

• Guidance assumes no further significant commodity, FX, or macroeconomic shocks.

• Free cash flow for 2025 expected below 2024 due to higher restructuring costs and smaller working capital improvements.