(AOF) – In Zurich, Nestlé lost 3.97% to 95.18 Swiss francs after revealing a mixed performance for the year 2023. The Swiss agri-food group posted a net profit up 20.9% to reach 11 .2 billion Swiss francs, at the end of a year in which it increased its prices by 7.5% to compensate for rising costs. This increase in net profit is mainly due to the reduction in asset depreciation and the reduction in taxes declared. As a result, earnings per share increased by 23.7% to 4.24 Swiss francs on a reported basis.
Its net profit margin increased by 230 basis points to 12.1% on a reported basis and by 240 basis points on a constant currency basis.
Nestlé also specifies that underlying operating profit decreased by 0.3% to 16.1 billion Swiss francs, due to currency appreciation. Gross margin increased by 70 basis points to 45.9%. Pricing, cost efficiency and portfolio optimization more than offset significant cost inflation.
The turnover of the owner of Nespresso coffee pods fell by 1.5%, to 93 billion Swiss francs. “The impact of exchange rates on sales was negative by 7.8%,” Nestlé underlined. It is lower than the consensus of 93.8 billion Swiss francs.
“Real internal growth was negative at 0.3%, impacted by weak consumer demand, capacity constraints and a temporary interruption in the supply of vitamins, minerals and supplements during the second half of 2023. As expected, “real internal growth turned positive in the fourth quarter, driven by benefits from portfolio optimization and improved customer service levels,” says Nestlé.
Organic growth of around 4% in sales anticipated for 2024
“Unprecedented inflation over the past two years has increased pressure on many consumers and affected demand for food and drink,” said Nestlé Chief Executive Mark Schneider.
For the year 2023, Nestlé plans to pay a dividend of 3 Swiss francs per share, an increase of 5 cents compared to the previous year. If approved, it will be the company’s 29th consecutive annual dividend increase.
In terms of prospects, for the year 2024, Nestlé anticipates organic growth of around 4% in its sales (compared to a consensus of 4.4%). It is also targeting a moderate increase in its underlying commercial operating margin. Underlying earnings per share at constant currency are expected to increase by 6-10%.
According to Invest Securities, “Nestlé has communicated 2023 results and 2024 guidance generally in line”. The broker affirms that the group’s 2025 objectives are confirmed: growth of +5% (compared to +4% expected) and an EBIT margin of between 17.5 and 18.5% (compared to 17.8% expected).
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