Nestle Cuts Full-Year Guidance Weeks After Naming New CEO

Nestle SA cut its sales and profit guidance for the year as it struggles to rebuild market share after higher prices turned consumers off branded products.

The maker of Nescafe coffee and Purina pet food now expects organic sales to rise around 2% in 2024, below the previous forecast of at least 3%, the company said in a statement Thursday. Sales climbed 2% in the first nine months of the year.

“Consumer demand has weakened in recent months, and we expect the demand environment to remain soft,” new Chief Executive Officer Laurent Freixe said. Organic growth in North America was the weakest, with sales contracting 0.3%. 

Nestle abruptly replaced CEO Mark Schneider with Freixe in September, shifting from an outsider who previously ran a health-care company to an insider who climbed the Swiss company’s executive ranks focusing on functions like marketing and selling. 

Freixe is attempting to restore investor confidence after recent stumbles. On Thursday, he announced a raft of organizational changes, including a slimmed down executive board and fewer geographical zones to speed decision making. Managers leading the push in digitization and sustainability will also report directly to the CEO, without sitting on the executive board.

Nestle also trimmed its full-year targets for underlying earnings per share and profitability. Underlying trading operating profit margin is now expected to be around 17%, rather than a modest improvement on last year’s 17.3%.