Press Release: Nestle: Solid 2024 performance; -3-

Net financial expenses increased to CHF 1.5 billion from CHF 1.4 billion, reflecting a higher level of average net debt and an increase in interest rates. The average cost of net debt was 2.6% compared to 2.5% in 2023.

The Group reported tax rate was 25.0%, compared to 18.2% in the prior year. The increase was mainly due to a write-off in deferred tax assets from changes in utilization projections and the absence of the favorable one-off items that positively impacted 2023. The underlying tax rate increased by 70 basis points to 21.9%, driven by higher corporate and withholding tax rates in some jurisdictions, as well as changes in the geographical and business mix of profits.

Net profit and earnings per share

Net profit decreased by 2.9% to CHF 10.9 billion. Basic earnings per share decreased by 1.0% to CHF 4.19, reflecting the movement in net profit and the impact of the share buyback program.

Underlying net profit was CHF 12.4 billion, a decrease of 2.6%, and an increase of 0.6% in constant currency. Underlying earnings per share was CHF 4.77, a decrease of 0.8%, and an increase of 2.5% in constant currency. The share buyback program contributed 1.1% to the underlying earnings per share change, net of finance costs.

Cash flow

Cash generated from operations increased to CHF 19.6 billion from CHF 19.2 billion in 2023. Free cash flow was CHF 10.7 billion compared to the prior year free cash flow of CHF 10.4 billion, which included CHF 0.6 billion proceeds from the disposal of a financial asset, with the increase primarily due to lower taxes paid and lower cash restructuring costs, as well as reduced capital expenditure.

Dividend

At the Annual General Meeting on April 16, 2025, the Board of Directors will propose a dividend of CHF 3.05 per share, an increase of 5 centimes. Nestlé has maintained or increased the dividend in Swiss francs over the last 65 years. We remain committed to the long-held practice of increasing the dividend in Swiss francs every year.

The last trading day with entitlement to receive the dividend will be April 17, 2025. The net dividend will be payable as from April 24, 2025. Shareholders entered in the share register with voting rights on April 9, 2025, at 12:00 noon (CEST) will be entitled to exercise their voting rights.

Share buyback program

In 2024, the Group repurchased 48.2 million Nestlé S.A. shares for CHF 4.4 billion under the CHF 20.0 billion share buyback program that began in January 2022 and was completed as planned in December 2024. Under the program, 187.4 million shares were repurchased in the three-year period, of which 143.9 million have so far been cancelled. At the upcoming Annual General Meeting, the Board of Directors will propose the cancellation of the remaining 43.5 million repurchased shares, reducing the share capital of Nestlé S.A. from CHF 262,000,000 to CHF 257,652,000. We do not currently anticipate initiating a new share buyback program in 2025.

Net debt

Net debt was CHF 56.0 billion as at December 31, 2024, compared to CHF 49.6 billion at December 31, 2023. The increase largely reflected cash outflows for the dividend payment of CHF 7.8 billion and share buybacks of CHF 4.5 billion as well as the impact of foreign exchange movements. The ratio of net debt to Adjusted EBITDA was 2.90 times at December 31, 2024, compared to 2.54 times at December 31, 2023. This is towards the top of our target range of 2 to 3 times for net debt to Adjusted EBITDA.

Return on invested capital

Return on invested capital was 14.1%, compared to 13.9% in 2023. This improvement reflects a lower base of average invested capital, mainly linked to working capital, and a reduction in restructuring costs.

Minority participations

In late 2024, we established Nestlé Equity Holdings to consolidate ownership of many of our minority participations, enhancing governance and allowing for a more consistent and efficient approach to managing these interests.

Operating segment review

Zone Zone Zone Nestlé

Total North Zone Zone Latin Greater Health Other

Group America Europe AOA America China Science Nespresso Businesses

Sales

FY-2024

(CHF m) 91,354 25,336 18,910 16,793 11,933 4,973 6,739 6,378 292

Sales

FY-2023

(CHF m) 92,998 25,995 19,098 17,519 12,196 5,037 6,498 6,372 283

Real

internal

growth

(RIG) 0.8% -0.8% 0.8% 0.6% - 0.3% 4.3% 5.5% 1.6% 5.3%

Pricing 1.5% 0.4% 2.5% 2.8% 2.7% - 2.1% 0.7% 0.6% 1.3%

Organic

growth 2.2% - 0.5% 3.3% 3.4% 2.5% 2.1% 6.2% 2.2% 6.6%

Net M&A - 0.3% - 0.1% - 1.9% 0.0% 0.4% 0.1% 0.2% 0.2% 0.0%

Foreign

exchange - 3.7% - 2.0% - 2.5% - 7.5% - 4.9% - 3.5% - 2.8% - 2.4% - 2.7%

Reported

sales

growth - 1.8% - 2.5% - 1.0% - 4.1% - 2.2% - 1.3% 3.7% 0.1% 3.9%

UTOP

FY-2024

(CHF m) 15,704 5,640 3,192 3,916 2,429 803 943 1,278 - 13

UTOP

FY-2023

(CHF m) 16,053 5,768 3,127 4,109 2,520 832 777 1,291 -12

UTOP

Margin

FY-2024 17.2% 22.3% 16.9% 23.3% 20.4% 16.1% 14.0% 20.0% - 4.3%

UTOP

Margin

FY-2023 17.3% 22.2% 16.4% 23.5% 20.7% 16.5% 12.0% 20.3% - 4.3%

UTOP - + 10bps + - - 30bps - 40bps + 200bps - 30bps Flat

Margin 10bps 50bps 20bps

YoY

Zone North America

Our growth in North America in 2024 was disappointing. Organic sales growth of -0.5% reflects mixed delivery across the portfolio, in the context of a challenging consumer environment. We delivered RIG-led positive organic growth in approximately two-thirds of the business by sales. This was offset by weak performance in frozen food and coffee creamers. Turnaround plans are underway in both businesses. In Zone North America, UTOP margin increased modestly, which was the result of an improvement in gross profit margin and a step-up in growth investments.

Segment performance summary

-- Organic growth was -0.5%, with -0.8% RIG and 0.4% pricing. Pricing was

negative in H2, driven by competitive dynamics in PetCare and price

adjustments in frozen food and coffee creamers.

-- Reported sales decreased by 2.5% to CHF 25.3 billion, including a -2.0%

impact from foreign exchange movements and -0.1% from net divestitures.

-- Market share gains were achieved in coffee, while we lost market share in

frozen pizza and coffee creamers.

-- UTOP margin increased by 10 bps to 22.3%. Gross profit margin expanded,

supported by pricing, price pack architecture and mix management, and

structural cost control was strong. Advertising and marketing investment

was increased significantly to support future growth.

Key sales growth drivers by product category

-- PetCare was the largest growth contributor, with low single-digit growth

driven by premium brands, particularly in the cat and therapeutic diets

segments.

-- Confectionery grew at a double-digit pace, driven by Tollhouse baking

products and pricing actions particularly in the second half of the year.

-- Beverages (including coffee and coffee creamers) delivered positive

growth overall, with new product launches supporting continued strong

momentum for Nescafé and Starbucks, offsetting a decrease in Coffee

mate.

-- Infant Nutrition saw a sales decrease, with a decline in Gerber in the

context of a category slowdown in baby food.

-- Frozen food posted negative growth, primarily reflecting the impact of

price competition in pizza and the winding down of the frozen meals

business in Canada.

Zone Europe

In Zone Europe, our sales growth was broad-based, with improved market share trends in a number of categories. Growth was mainly pricing led, reflecting the inflationary environment for coffee and confectionery, supported by positive RIG in coffee and PetCare. Growth was impacted by temporary delistings in the third quarter, but recovered in the fourth quarter, driven by coffee and confectionery. UTOP margin increased, with improved gross profit margin and portfolio optimization helping fund the step-up in growth investment.

Segment performance summary

-- Organic growth was 3.3%, comprising 0.8% RIG and 2.5% pricing.

-- Reported sales decreased by 1.0% to CHF 18.9 billion, including -2.5%

impact from foreign exchange movements and -1.9% from net divestitures.

-- Market share gains were achieved in coffee and PetCare, with losses in

confectionery and water.

-- UTOP margin increased by 50 basis points to 16.9%, driven by strong gross

profit margin improvement and supported by portfolio optimization.

Key sales growth drivers by product category

-- Coffee posted mid single-digit growth, driven by Nescafé soluble

coffee and Starbucks products.

-- Sales in confectionery grew at a mid single-digit pace, driven by KitKat

and key local brands.

-- PetCare delivered low single-digit growth, led by Purina ONE, Gourmet and

ProPlan.

-- Nestlé Professional achieved mid single-digit growth, driven by

beverage solutions.

-- Water saw low single-digit growth, impacted by supply constraints in the

second half of the year.

-- Infant Nutrition posted negative growth, reflecting a category slowdown.

Zone Asia, Oceania and Africa

(MORE TO FOLLOW) Dow Jones Newswires

February 13, 2025 01:00 ET (06:00 GMT)