Is Nestle returning to its usual growth rates?
$NESN Nestle is in the middle of a multi-year transformation process "to extend its market leadership by focusing on high-growth and high-margin categories".
A strong balance sheet, high cash flows, very stable margins and a shareholder-friendly dividend policy are all arguments in favor of the share right now, but what about the future?
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Margin expansion works best with strong brands, of course. $NESN is currently well positioned. In the long term, the company will benefit from pent-up demand in the emerging markets and the rising demand for higher-quality foods.
Although volume growth has cooled off amid high inflation rates, CEO Ulf Marc Schneider is focusing on strong brands and is systematically disposing of all low-performers or reducing their participation.
Nestlé plans to increase the profit margin to 17.5 to 18.5 percent by 2025, which should lead to annual profit growth of 6 to 10 percent. Nestlé further strengthens its coffee business with the acquisition of Starbucks distribution rights and the takeover of Seattle's Best Coffee. Despite a weak year-end and start to the year, the outlook remains positive.
So are the brands strong enough so that price increases do not lead to a lower market share?
More on Nestlé's strategy and outlook here: https://www.ideas-magazin.de/2024/ausgabe-266/maerkte/nestle-rueckkehr-zu-gewohnten-wachstumsraten/
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