Nestle: outlines value creation model and 2025 targets

Vevey / CH. (nsa) At its investor seminar in Barcelona (ES), Swiss Nestle S.A. shared its strategy for sustainable value creation and outlined its 2025 targets. The company explained how it will continue to deliver sustainable mid single-digit organic sales growth. Nestle expects to return to an underlying trading operating profit margin range of 17.5 percent to 18.5 percent by 2025, following the margin impact of a sharp increase in cost inflation in 2021 and 2022. The company also expects to deliver an annual underlying EPS growth range of 6 percent to 10 percent in constant currency over the period 2022 to 2025. It plans to trend toward free cash flow of 12 percent of sales and ROIC of 15 percent by 2025.

During the presentations, Nestle described its plans to boost growth through brand building, innovation and digitalization, while supporting margin development through efficiency programs. The seminar also covered how Nestle Health Science is developing its leadership position in nutrition and health.

Mark Schneider, Nestle CEO: «We have made significant progress in recent years, accelerating organic growth, increasing margins and enhancing capital efficiency. Today, we outline our value creation model and targets for 2025 as we aim to deliver consistently in turbulent times. We will continue to invest for future growth, investing behind our brands, delivering impactful innovation, leveraging digitalization and improving speed and agility. Creating shared value for stakeholders remains our focus, with Good for You, Good for the Planet at the heart of our strategy.»

Regarding financial metrics, Nestle pursues a value creation model that balances growth in earnings per share, competitive shareholder returns, flexibility for external growth and access to financial markets. The company will continue to invest to drive brand building, innovation, digitalization and sustainability.

The company has created significant value through portfolio management, contributing to increased growth and improved margins. The net annual return on acquisitions since 2018 is between 11 percent and 13 percent, with a large majority of transactions at or above their business plans. Nestle will continue to pursue external growth opportunities in fast growing segments and regions. The company remains disciplined in its approach to portfolio management, looking for strategic and cultural fit, as well as attractive financial returns.

Nestle has decided to explore strategic options for Palforzia, the peanut allergy treatment, following slower than expected adoption by patients and healthcare professionals. The review is expected to be completed in the first half of 2023. Going forward, Nestle Health Science will sharpen its focus on Consumer Care and Medical Nutrition.

In Barcelona Nestle also confirmed its ongoing program to repurchase CHF 20 billion of its shares over the period 2022 to 2024. The company has already bought around CHF 9.7 billion of shares in 2022. Nestle aims to maintain its practice of increasing its dividend year-on-year in Swiss francs.

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