Nestlé’s sees 2.9% profit drop as dairy sales decline

USA – Nestlé reported a decline in net profit to CHF 10.9 billion, marking a 2.9% decrease. Basic earnings per share dropped by 1% to CHF 4.19, while underlying earnings per share increased by 2.5% in constant currency. 

Organic sales grew by 2.2%, driven by a 1.5% price increase and a 0.8% rise in real internal growth. 

The company identified coffee as its strongest growth driver, with confectionery and PetCare also contributing positively. 

However, the dairy segment posted negative growth, as losses in coffee creamers and ambient dairy outweighed gains in affordable milks and dairy culinary solutions.

A report by Nestlé highlighted that dairy sales declined in Asia, Oceania, and Africa due to the introduction of a sales tax in Pakistan and strategic efforts to manage customer inventories and reshape the product portfolio. 

The company also recorded losses in Latin America and Greater China. To counterbalance these challenges, Nestlé is focusing on cost reduction, targeting CHF 2.5 billion in savings by 2027, with CHF 0.7 billion expected in 2025. 

Procurement accounts for three-quarters of these savings, with artificial intelligence playing a key role in supplier management and cost optimization. 

Nestlé stated that its efficiency measures have mitigated rising commodity costs in coffee and cocoa, allowing the company to stay on track with its 2025 financial targets.

Unilever to spin off ice cream business

Meanwhile, Unilever announced plans to demerge its ice cream business, with the process set to be completed by the end of 2025. 

The newly separated entity will be based in Amsterdam and listed on the stock exchanges in Amsterdam, London, and New York. Jean-Francois van Boxmeer, former CEO of Heineken, has been appointed chair designate of the new ice cream division. 

“We are making progress on the key workstreams, including the legal entities set up, implementing the standalone operating model, and preparing the carve-out financials,” Unilever said.

For the full year, Unilever reported a 4.2% increase in underlying sales growth, supported by a 2.9% rise in volume and a 1.3% price increase. 

Turnover reached €60.8 billion, reflecting a 1.9% increase, while underlying operating profit rose by 12.6% to €11.2 billion. 

The company noted an improvement in its ice cream business in the fourth quarter, with a 3.7% growth rate and a 1.6% return to positive volume growth. Unilever attributed this recovery to product innovations and operational improvements.

The company expects slower market growth at the start of 2025 but anticipates a more balanced split between volume and price adjustments.