LONDON (Reuters) -Nestle announced it is revamping senior leadership and its operating structure, cut its full-year sales outlook and reported worse-than-expected nine-month organic sales growth, after failing to raise volumes amid continued price hikes.
The Swiss company said on Thursday it expects 2024 organic sales growth to be around 2% and an underlying trading operating profit (UTOP) margin of about 17% for the year.
In July, Nestle had said it expected full-year organic sales growth of at least 3% and that its UTOP margin for 2024 would grow moderately from the 17.3% it had reported in 2023.
Nine-month organic sales for 2024, which exclude the impact of currency movements and acquisitions, rose 2%, the maker of Maggi stock cubes and Nescafe coffee said.
Analysts had, on average, expected organic sales growth of 2.5%.
“Consumer demand has weakened in recent months, and we expect the demand environment to remain soft,” new CEO Laurent Freixe said. Freixe assumed office at the start of September after his predecessor, Mark Schneider, was ousted following several quarters of weak sales volume growth.
On Thursday, Nestle said Freixe plans to reduce the size of his executive board, merge the company’s Latin America and North America units, and merge its Greater China and Asia, Oceania and Africa businesses, among other changes.
Nestle’s nine-month 1.6% price increases were behind the average analyst estimate of 1.7%. Real internal growth – or sales volumes – rose 0.5% in the period versus expectations of a 0.8% increase.
By comparison, analysts expect major rival and Knorr stock cube maker Unilever (LON:) to report a 1% increase in underlying prices and 3.2% underlying sales volume growth when it reports next week, according to a company-provided consensus.
