Nestlé updates growth forecast for 2022 but warns of weaker consumer demand in Western Europe
The world’s largest food maker upgraded its sales forecast for this year and now expects net sales to grow between 8% and 8.5%, compared with the 8% expected in October.
It revealed new long-term targets, announcing it would return to a core operating profit margin of 17.5% to 18.5% by 2025 after inflation hits. It also expects to deliver underlying earnings per share growth of 6 to 10% per year through 2025.
It also showed cuts in recently acquired businesses and decided to explore strategic options for Palforzia, a peanut allergy treatment, after slower-than-expected acceptance by patients and healthcare professionals. The review is expected to be completed in the first half of 2023. Going forward, Nestlé Health Science will sharpen its focus on consumer care and health nutrition, the report said.
Nestlé will also launch Freshly, the US meal kit business it acquired in 2020. Nestlé did not disclose the financial terms of the deal, but said Freshly “has not achieved the scale or performance we had hoped for” following “dramatic shifts in the external business environment”.
Mark Schneider, CEO of Nestlé, said: “We have made significant progress in recent years, accelerating organic growth, increasing margins and improving capital efficiency. Today we outline our value creation model and our 2025 goals as we strive to deliver consistent results in turbulent times. We will continue to invest for future growth by investing in our brands, delivering impactful innovation, leveraging digital and improving speed and agility. Creating shared value for stakeholders remains at the center of our focus, at the heart of our strategy – “Good for you, good for the planet”.
The company added that it is eyeing fast-growth industries such as pet care and coffee where “demand is strong.” “We don’t hesitate to stop selling unprofitable or unprofitable brands,” said Executive Vice President François-Xavier Roger.
Schneider noted that the company has focused on fewer SKUs with a better pricing architecture versus M&A to drive growth.
He also warned that the decline in consumer demand in Western Europe posed a risk to its prospects.
“Obviously, the one region I’m watching with great concern next year is Western Europe. Consumer behavior will be key. Whether it’s the cost of energy, the cost of mortgages, the recession, unemployment, the impact of inflation on consumer behavior, it’s a pretty complex environment that hasn’t been in this mix for a long time. The $64,000 question, starting in January, what will consumer behavior do? That’s when some of the scumbags are going to hit consumers.”
https://www.foodnavigator.com/Article/2022/11/29/nestle-updates-2022-growth-outlook-but-warns-of-weaker-consumer-demand-in-western-europe?utm_source=RSS_Feed&utm_medium=RSS&utm_campaign=RSS Nestlé updates growth forecast for 2022 but warns of weaker consumer demand in Western Europe
