Nestle is set to announce its full-year results on Thursday. Here are the key details:
Sales Forecast
The Swiss food-and-beverage giant is projected to disclose sales of 93.68 billion Swiss francs ($106.14 billion) for 2023, slightly lower than CHF94.42 billion in the previous year, as per a company-compiled consensus.
Profit Forecast
The company-compiled consensus anticipates a net profit of CHF11.76 billion, up from CHF9.27 billion in the prior year.
Stock Performance
Over the last 12 months, shares have declined by approximately 9% to CHF99.23.
Key Points to Monitor
Sales Growth
- Organic sales growth is expected to reach 7.4% this year, with pricing increasing by 7.5%. However, real internal growth, a metric for sales volumes, is projected to dip by 0.1%, according to the consensus estimate.
- For the fourth quarter, UBS analysts predict organic growth of 6.2%, coupled with a return to positive real internal growth of 1.8% following four consecutive quarters of decline.
Market Trends
- With 35% of its sales in the U.S., Nestle may not be shielded from the slowing food volume trends witnessed by its industry peers, notes analysts at Barclays.
- On a positive note, Nestle is expected to see favorable real internal growth comparisons in the fourth quarter and is gearing up to boost marketing expenditure significantly to foster innovation and drive growth into 2024, as per the bank’s analysis.
Nestle’s Positive Outlook
According to AlphaValue, the Swiss company is expected to see an increase in margins in the second half of the year, with a 40 basis points rise anticipated, following a 20 basis points improvement in the first half. Looking towards 2024, there is consensus for a 40 basis points margin growth driven by factors such as enhanced volume growth, increased marketing spend, and efficiency measures.
Growth Projections for 2023 and Beyond
Nestle has provided guidance for 2023, forecasting organic sales growth between 7% and 8% and an underlying operating profit margin ranging from 17.0% to 17.5%. Additionally, the company expects underlying earnings per share at constant currency to grow between 6% and 10%. The focus now shifts to 2024 projections, with market expectations set at 4.7% organic sales growth, 2.6% RIG, and an underlying trading operating profit margin of 17.8%.
Future Prospects
AlphaValue suggests that investors should keep a close eye on the profitability outlook for 2024. They believe that a return to sustainable and profitable growth will drive a more positive share price performance in the coming period.
