The lead time for Laurent Freixe was extremely short: just ten days after being appointed as Nestlé's new CEO, the Frenchman took up office as head of the world's largest food company on September 1. At the same time, Mark Schneider left the company. The German-American had been at the helm of the industry giant, which has 270,000 employees, for eight years. Schneider increasingly geared Nestlé towards healthier nutrition. Initially, this strategy, accompanied by acquisitions and sales, seemed to be working: Nestlé posted an organic growth rate of 5.5% for the 2021 financial year. However, the phase of inflation that followed the coronavirus pandemic caused the successful model to falter. Nestlé was initially able to counter the cost pressure with massive price increases. But the reaction of consumers was not long in coming. Instead of Nestlé brands such as Nespresso, Kitkat or Maggi, they increasingly turned to cheaper alternatives.
In line with this, Nestlé's volume growth (RIG) declined significantly. As the Group had to moderate its prices at the same time, organic sales hardly made any progress. There was a small ray of hope in the second quarter of 2024 (see chart). Nevertheless, the CEO had to adjust the forecast for 2024. "We now expect organic sales growth of at least 3%," explained Mark Schneider. He had previously assumed one percentage point more. The stock market hit a low after the presentation of the half-year figures. On July 26, Nestlé slipped to less than CHF 86 for the first time since March 2020. It is now up to Laurent Freixe to restore the status of the approximately CHF 280 billion large cap as a kind of "bond substitute". Unlike his predecessor - Schneider moved from healthcare group Fresenius to Lake Geneva - he knows the company inside out. Freixe has worked for Nestlé since 1986. As CEO, he wants to get growth back on track and increase market share.
It will be interesting to see how much the 62-year-old intervenes in the Group structure. According to analysts, the sale of the healthcare division would be an option in the medium term. Business with vitamins, minerals and other nutritional supplements was weak in the first half of the year. However, if the Chairman of the Board of Directors has his way, Nestlé will hold on to the business unit. "It was always clear that we were breaking new ground," explained Paul Bulcke in a recent newspaper interview. You have to live with the fact that something will go wrong. "But it's definitely a promising area with benefits for society. Just think of the special nutrition for the ageing population," said the strong man in the company. Investors and analysts are now eagerly awaiting the new CEO's first public appearances.
On October 17, Laurent Freixe presents the sales figures for the first nine months of 2024. Just over a month later, the "Investor Seminar" is scheduled for November 19. The top manager could use this event at the company headquarters in Vevey to outline his plans and objectives in more detail. There is certainly plenty of excitement at Nestlé on the home stretch of the 2024 stock market year. Investors who believe the battered share could make a comeback might want to take a look at the new bonus outperformance certificate. This product enables partially protected participation in the prominent underlying. As long as Nestlé does not fall to or below the barrier of 69% of the starting price during the three-year term, Leonteq will repay the certificate at least at the bonus level of 100%. If the large cap turns upwards, the product participates disproportionately in all advances. The participation is 150%. Assuming Nestlé stands at CHF 105 at the beginning of September 2027, the price gain of around 16% would result in a return of almost a quarter for the bonus outperformance certificate. Important: The bonus mechanism or the partial protection expires as soon as Nestlé falls to or below the barrier.
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