Harnessing Today’s Opportunities For A Sustainable Brighter Tomorrow
Nestlé’s success story as a leading global food manufacturer is linked to so many factors such as its Nutrition, Health, and Wellness strategy, which focuses on food and beverages, its worldwide presence and commitment to creating shared value for society and shareholders, its investment in technology/innovation, research and development as well as ability to identify business opportunities and take advantage of same for the prosperity of all stakeholders. EDET UDOH Writes.
As the Good food, Good life company, Nestlé has always been at the forefront of providing consumers with products they love and rely on even in the face of ongoing global challenges these past years, the Company stays true to its long-term ambitions seeing a bright future with emerging opportunities, while its competitors see dark and gloomy future.
Nutrition, Health and Wellness remain the core of its operations. Within that framework, the Company continues to set new priorities with innovative capabilities that consistently meet the rising expectations of a growing population. Over the past years, portfolio optimisation has allowed the Company to focus on proven brands. Operational excellence enables the Company to deliver sustainable, profitable growth, even as it continues to do business in a way that creates shared value for its teeming shareholders and society as a whole.
Food and Beverages As Major Drivers
Foods and beverages are major drivers of long-term health, and consumers increasingly recognise this, thereby boosting the company’s confidence to continue to develop nutritious products that support people’s well-being, which they believe will see increased demand in the years to come.
In fact, in 2023, Nestle reconfirmed its ambition to prioritize the development of more nutritious products. This led to the company’s launching of new products and renovating existing ones, expanding micronutrient fortification, growing affordable offerings, reducing sugar and salt content, and increasing the use of plant-based ingredients in its recipes.
Through enhancing the quality of life contributing to a healthier future, and delivering sustainable, industry-leading financial performance, contributing to the prosperity of its shareholders, the Good Food Good Life company has continued to earn the trust of its shareholders and consumers.
Established in 1866, Nestle has built a successful business in the past 158 years by understanding and anticipating consumer needs and adapting to an evolving marketplace. Based on a compelling strategy, the company delivers dependable value over the short and long term for its stakeholders.
Encouraging Balanced Diet, Supporting Healthy Aging
Additionally, as a business strategy, Nestle is actively guiding people towards a more balanced diet by making the nutritional value of its portfolio more transparent and also strengthening its responsible marketing of indulgent products, providing clear front-of-pack portion guidance, and engaging with and informing consumers through various online communities around the world.
In supporting healthy ageing, Nestlé’s food and beverage portfolio caters to people at each stage, starting with the first 1000 days and continuing into adulthood and old age. With a rapidly ageing global population, Nestle sees an opportunity to provide products that can support the nutrition, health and wellness of older people, therefore helping boost their energy levels, enhancing their cognitive health, supporting their mobility, and improving their general physical and mental health.
Already, the Company is offering several Nestlé Health Science and dairy products that are specifically targeted to seniors. Take, for example, successful brands like Boost, Pure Encapsulations or Molico, with its capabilities, the Company believe that it can leverage this trend across all operations categories to further grow its bottom line.
Investing In Technology/Innovation
To stay on top of the game, Nestle is investing heavily in future through innovation and entrepreneurship using the Company’s research centre in Switzerland and 23 sites globally, and with an industry-leading R&D budget, Nestle has developed products tailored to the diverse needs of people and pets while reducing its environmental footprint.
Nestlé’s experts at its newly inaugurated Institute of Agricultural Sciences, for example, develop solutions in the areas of plant science, agricultural systems and dairy livestock and this is in addition to the Company’s four other research institutes looking at health sciences, food sciences, food safety and packaging.
In Nestle, digital technologies, including artificial intelligence (AI), are supporting sharper decision-making and increased speed across the entire company. From procurement to e-commerce, digital analytics facilitate efficiency and effectiveness. Data science and AI increasingly support the Company with innovation by revealing and predicting consumer demands, while also helping in bringing new products to market faster.
Through its strong global capabilities, the Company has continued to develop exciting innovations that can be applied across different products, brands and categories. One of its latest unique science-based innovations is Nestlé N3 milk, which offers new nutritional benefits. Made from cow’s milk, it has all the essential nutrients found in milk, including proteins, vitamins and minerals. In addition, it also contains beneficial prebiotic fibres and has a low lactose content and over 15% fewer calories.
Using proprietary technology, Nestle used specialized enzymes to break down lactose, a sugar found in cow’s milk, while generating prebiotic fibres. Clinical studies showed that the fibres promote the growth of multiple types of bifidobacteria, delivering gut microbiome benefits in healthy adults.
N3 milk was first introduced in 2023, in a range of powdered dairy products in China, tailored to meet the dietary needs of local consumers. The N3 range includes a full cream and a skimmed milk product, both high in protein and perfect for the whole family. To support specific needs for healthy aging, the range includes two products with vitamins, minerals and probiotics to support bone health, muscle growth and strength, and immunity.
Creating Shared Value
Creating Shared Value has become a household culture of how business is done at Nestlé, generating value not only for its shareholders but also for society. Nestlé’s long-term success is supported by this approach. An example of this is Nestlé’s efforts to advance regenerative food production by helping to protect, renew and restore natural resources. With this in mind, the Company is supporting farmers and strengthening their communities, thereby delivering on it commitments in a way that appeals to consumers’ increased expectations.
Remaining dedicated and dependable
As a result of its deliberate commitment to people’s well-being, people all over the world rely on Nestlé for good food and beverages based on its proven value creation model which allows them to invest, innovate and grow even in challenging times, making the Company dependable for its shareholders and other stakeholders.
In a message to the Company’s Shareholders titled: “Pursuing significant global opportunities,” contained in the Company’s 2023 Annual Review, jointly signed by Paul Bulcke, Chairman and Mark Schneider, Chief Executive Officer, Nestle reiterated its commitment to encouraging balanced diets; supporting healthy ageing; investing in innovation; creating shared value and remaining dedicated and dependable to consolidate its business gains and opportunities.
According to the message, As the Good Food, Good Life company, Nestlé is proud to provide consumers with products they love and rely on. Even in the face of ongoing global challenges these past years; we stay true to our long-term ambitions and see a bright future with emerging opportunities.
“Nutrition, Health and Wellness is our past, present and future, and within that frame we continue to set new priorities. Our innovation capabilities enable us to consistently meet the rising expectations of a growing population. Portfolio optimization over the past years allows us to focus our efforts on our proven brands. Our operational excellence enables us to dependably deliver sustainable, profitable growth. And we continue to do business in a way that creates shared value for both our shareholders and society.
“Foods and beverages are major drivers of long-term, in 2023, we reconfirmed our ambition to prioritize the development of our more nutritious products. This entails launching new products and renovating existing ones. It involves expanding micronutrient fortification, growing our affordable offerings, reducing sugar and salt content, and increasing our use of plant-based ingredients in our recipes. Health and consumers increasingly recognize this. We will continue to develop nutritious products that support people’s well-being, and we believe that such products will see increased demand in the years to come.
“In fact, in 2023, we reconfirmed our ambition to prioritize the development of our more nutritious products. This entails launching new products and renovating existing ones. It involves expanding micronutrient fortification, growing our affordable offerings, reducing sugar and salt content, and increasing our use of plant-based ingredients in our recipes.
“Additionally, we are actively guiding people towards a more balanced diet by making the nutritional value of our portfolio more transparent. We are strengthening our responsible marketing of indulgent products, providing clear front-of-pack portion guidance, and engaging with and informing consumers through our various online communities around the world.
“Nestlé’s food and beverage portfolio caters to people at each stage of their life. It starts with the first 1000 days and continues into adulthood and old age. With a rapidly ageing global population, we see an opportunity to provide products that can support the nutrition, health and wellness of older people. We can help boost their energy levels, enhance their cognitive health, support their mobility, and improve their general physical and mental health.
“We already offer several Nestlé Health Science and dairy products that are specifically targeted to seniors. Take, for example, successful brands like Boost, “Pure Encapsulations or Molico. With our capabilities, we believe that we can leverage this trend across all of our categories to further grow,” the duo stated.
Speaking on investing in innovation they said “We are investing in our future through innovation and entrepreneurship. Through our main research centre in Switzerland and 23 sites globally, and with an industry-leading R&D budget, we develop products tailored to the diverse needs of people and pets while reducing our environmental footprint. Experts at our newly inaugurated Institute of Agricultural Sciences, for example, develop solutions in the areas of plant science, agricultural systems and dairy livestock.
“This is in addition to our four other research institutes looking at health sciences, food sciences, food safety and packaging.
“Digital technologies, including artificial intelligence (AI), are supporting sharper decision-making and increased speed across the entire company. From procurement to e-commerce, digital analytics facilitate efficiency and effectiveness. Data science and AI increasingly support us with innovation by revealing and predicting consumer demands, while also helping us bring new products to market faster.
“Creating Shared Value,” they said “is how we do business at Nestlé, generating value not only for our shareholders but also for society. Nestlé’s long-term success is supported by this approach. An example of this is Nestlé’s efforts to advance regenerative food production by helping protect, renew and restore natural resources. To that end, we are supporting farmers and strengthening their communities.
“We are delivering on our commitments in a way that appeals to consumers’ increased expectations.”
On remaining dedicated and dependable, the Chairman, and CEO said “Every year, our people show us how much can be achieved when we steadfastly pursue opportunities. We know that we do not have all the answers, but with our global mindset combined with our expert knowledge of local consumers and markets, we are confident we can deliver on our ambition and our commitments. People all over the world rely on Nestlé for good food and beverages. Our proven value creation model allows us to invest, innovate and grow even in challenging times and makes us dependable for our shareholders and other stakeholders. We are grateful for the support of our employees, business partners, consumers and communities. And we thank you, our shareholders, for your continued trust.”
Nestle Towering Over Competitors
In 2022, according to Forbes Global 2000 list of the world’s largest public companies, Nestlé was announced as the world’s largest food company, holding onto the top seat in the industry with more than $93 billion in sales.
Nestlé’s frozen staples like Hot Pockets, Stouffer’s and DiGiorno flew off grocery store shelves as more consumers stayed at home. Nestle operates a large bottled water business and owns the coffee brand Nespresso.
The Swiss-based conglomerate sees most of its sales from the U.S. and has nearly 70 stateside factories.
On the second position was PepsiCo Inc., United States, while Anheuser-Busch InBev was ranked third.
Nestle Group’s 2023 Financial Reports
The Group’s financial report for 2023 showed that Organic growth reached 7.2%, with pricing of 7.5% and real internal growth (RIG) of -0.3%. Growth was broad-based across geographies and categories.
Total reported sales were CHF 93.0 billion, a decrease of 1.5% (FY-2022: CHF 94.4 billion). Foreign exchange decreased sales by 7.8%. Net divestitures had a negative impact of 0.9%.
The underlying trading operating profit (UTOP) margin was 17.3%, increasing by 20 basis points on a reported basis and by 40 basis points in constant currency. The trading operating profit (TOP) margin was 15.6%, increasing by 160 basis points.
Underlying earnings per share increased by 8.4% in constant currency and by 0.1% on a reported basis to CHF 4.80. Earnings per share increased by 23.7% to CHF 4.24 on a reported basis, mainly reflecting one-off items in the prior year.
Free cash flow was CHF 10.4 billion, an increase of CHF 3.8 billion following a significant reduction in working capital.
Board, had in 2023 proposed a dividend of CHF 3.00 per share, an increase of 5 centimes, marking 29 consecutive years of dividend growth. In 2023, CHF 12.8 billion were returned to shareholders through a combination of dividends and share buybacks.
For 2024, the conglomerate expects organic sales growth of around 4% and a moderate increase in the underlying trading operating profit margin. Underlying earnings per share in constant currency is expected to increase between 6% and 10%.
For the 2025 outlook, the company confirmed a mid-targets of mid-single-digit organic sales growth and an underlying trading operating profit margin range of 17.5% to 18.5% by 2025 while underlying earnings per share in constant currency is expected to increase between 6% and 10%.
Commenting on the 2023 performance, Nestle CEO, Mark Schneider, Nestlé CEO, stated: “Unprecedented inflation over the last two years has increased pressure on many consumers and impacted demand for food and beverage products. In this challenging context, we delivered strong organic growth and solid margin improvement with increased marketing and other growth investments. Our free cash flow generation returned to historical levels.
Looking to 2024, we are prioritizing volume- and mix-led growth with increased brand support, as we enhance value for consumers through active innovation and renovation, premiumization, affordability and more nutritious options. We will continue to focus capital allocation on our fast-growing billionaire brands, which enables us to deliver dependable growth while enhancing brand loyalty.
To drive market share gains, our key priorities are delighting consumers through differentiated offerings and focusing on superior execution. We are confident that we have the right strategy, portfolio and capabilities to deliver on our 2025 targets.”
Nestle Nigeria’s First Quarter 2024 Financial Report
In Nigeria, Nestle has continued to record significant performance in it operations across all metrics as contained in its first quarter financial report for the period ended March 31, 2024, posting a 43.4 percent Year-on-Year (YoY) increase in revenue.
During the period under review, the company grew its revenue to N183.5 billion from N128 billion in the corresponding period in 2023, Q1’23.
Highlights of the company’s Q1’24 financial statement filed at the Nigerian Exchange Limited (NGX) show that the gross profit fell to N49.1 billion from N51.6 billion in the same period of 2023, while the further devaluation of the Naira in the first three months of the year resulted in N142.7 billion net loss within the period.
Commenting on the results, Mr. Wassim Elhusseini, the CEO/MD of Nestlé Nigeria Plc said, “Our first quarter sales reflect a positive growth momentum despite a challenging business environment. The broad-based growth across our portfolio is a testimony to the resilience, adaptability, and commitment that are embedded in our business.
“Our sales grew by 43.4% in Q1 2024, with earnings of N183.5 billion, an increase of N55.5 billion over the January to March 2023 quarter.
“However, further devaluation of the Naira in Jan-March 2024 led to the revaluation of our foreign currency obligations which hurt the profit after talking, resulting in a net loss of N142.7 billion for the quarter.”
“Looking ahead into the rest of 2024, our focus remains on optimizing our operations to ensure the availability and accessibility of high-quality food and beverages for our loyal consumers.
“We will continue to invest in efforts that help build thriving communities and deliver long-term value to our stakeholders.
“This includes enhancing the capabilities of our people and implementing innovative marketing initiatives to drive sustainable growth and maintain our competitive edge in the market.
“With our strong foundation and commitment to delighting our consumers, I am confident in our ability to deliver long-term value to our shareholders while creating value for our communities,” Elhusseini added.
A successful business is known for its ability to solve societal problems and ensure return on investment to its shareholders, Nestle, the world’s number one food/beverage manufacturer with 158 years of serving consumers with diverse needs, from diverse backgrounds, and with a deliberate commitment to customer’s satisfaction, is known for its ability to identifying emerging business opportunities and also harnessing same for a sustainable business growth that guarantees a brighter future and prosperity of the people.
