Nestlé could use the fresh start provided by new CEO Laurent Freixe in the coming months to lower financial guidance for the second time this year following months of weak sales volumes, according to some analysts and investors.
Under former chief Mark Schneider, who was ousted in August, the world's biggest food company already cut its guidance once this year.
Moderate Increase
In February, Nestlé said it expected 2024 organic sales growth around 4% and a moderate increase in the underlying trading operating profit margin.
By July, it estimated organic sales growth "of at least 3%", and a mid-single-digit percentage rise in underlying earnings per share at constant currencies, sending its stock down by more than 5%.
"A lot of investors are wondering, can they really hold on to the prior margin guidance? Or if the brands need a little bit more investment?" said Jeneiv Shah, portfolio manager at Nestlé investor Sarasin & Partners. "I think it's commonly known now that's a potential scenario."
Organic Sales Growth
Nestle declined to comment.
On Thursday, the Swiss group is expected by analysts to report nine-month organic sales growth of 2.5%, according to a company-provided consensus.
Real internal growth - a metric reflecting sales volumes - is expected to have risen by 0.8%.
Freixe's challenges include reviving innovation and marketing, and winning back investor confidence in core brands, which include Nescafe coffee and Kit-Kat wafer snacks.
The packaged food industry has in recent years had to cope with soaring costs as everything from sunflower oil and shipping to packaging, grain and energy became more expensive during the pandemic and after Russia's full-scale invasion of Ukraine.
This year, as inflation has eased, many of Nestlé's competitors have slowed price increases, hoping to woo back shoppers who turned to cheaper products.
Nestlé, however, did not cut prices as quickly, analysts said, and Schneider's departure came on the heels of several weak quarters of sales volumes.
