By Maitane Sardon
Nestle is scheduled to report sales results for the first quarter on Thursday. Here is what you need to know.
ORGANIC SALES FORECAST: The Swiss maker of KitKat chocolate bars and Nescafe coffee is expected to report organic sales growth of 2.5%, according to a company-compiled consensus. Growth is likely driven mostly by higher prices, which are expected to have risen 1.8%.
The volume of products sold, or real internal growth, is seen at 0.8% and is expected to continue growing slowly in 2025 amid weak consumer demand and rising costs for key ingredients like coffee and cocoa beans. Results will benefit from a weaker comparison last year but face headwinds, including fewer trading days and the timing of Easter and the Chinese New Year.
REPORTED SALES FORECAST: Sales are expected at 22.50 billion Swiss francs ($27.47 billion), compared with 22.09 billion francs a year earlier, based on estimates from 20 analysts.
Shares are up 19% in the first quarter at 87.32 francs. They have risen 17% so far this year.
WHAT TO WATCH
--The company said earlier this year it continues to expect sales growth to improve on year, with increased investments driving growth. Underlying trading operating profit margin--its preferred profitability metric--is now expected at 16% or more. However, the margin guidance hasn't factored in the potential impact from U.S. tariffs or a further increase in prices of key raw materials, UBS analysts said in a research note.
--The company is shifting its strategy, focusing on fewer but stronger product launches and boosting marketing investments to 9% of its sales by the end of 2025. While it has a plan, high costs for raw materials combined with a weak consumer demand-- specially in the U.S.--, are likely to squeeze margins in 2025, analysts say. "Nestle's turnaround remains a show-me story, and we prefer to stay on the sidelines pending concrete delivery on targets, Stifel analyst Cedric Norest said in a note to clients.
Write to Maitane Sardon at maitane.sardon@wsj.com
(END) Dow Jones Newswires
April 23, 2025 04:02 ET (08:02 GMT)
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