Full Year 2024 Nestle SA Earnings Call - Press Conference

February 13, 2025

Good morning, everyone welcome to naturalists full year results Press conference.

Operator: Good morning, everyone. Welcome to Nestlé's Full Year Results Press Conference. Thank you for joining us this morning. With me here today are Laurent Freixe, our CEO, and Anna Manz, our CFO. Before we get started, let me remind you of a couple housekeeping items. You're currently placed on mute. You will be invited to ask questions after the presentations. Now, please take a moment to read the disclaimer on your screen. Thank you. With that, let's now move into the prepared remarks from Laurent and Anna.

Thank you for joining us this morning.

Speaker Change: With me here today are normal frakes, our seal and kind of months our CFO.

Speaker Change: Before we get started let me remind you of a couple of housekeeping items. You're currently placed on mute you will be invited to ask questions. After the presentations.

Speaker Change: So please take a moment to read the disclaimer on your screen.

Speaker Change: Thank you with that lets now move into the prepared remarks from long haul and Anna.

Anna: Many thanks, Christoph and good morning to all.

Laurent Freixe: Many thanks, Christophe, and good morning to all. Let me start with four key messages regarding 2024 and our outlook. First, we delivered 2024 results in line with or slightly better than our latest guidance provided in October, both on top line and on profitability, and cash flow was strong. Second, we have given formal 2025 guidance this morning. This is unchanged versus the previous outlook comments we provided despite the recent commodity price moves. Third, we are stepping up investment to accelerate category growth and improve market share performance. This is funded by our CHF 2.5 billion cost savings program called Fuel for Growth. We'll provide some more details on progress today.

Long Haul: Let me start with four key messages regarding 2024 and our outlook.

Long Haul: First we delivered the 'twenty 'twenty four results in line with or slightly better than our latest guidance provided in October boost.

Long Haul: Both on top line and on profitability and cash flow was strong.

Long Haul: Second we have given formal 2025 guidance this morning.

Long Haul: This is unchanged versus the previous outlook comments, we provided despite the recent commodity price moves.

Long Haul: Third we are stepping up the investment to accelerate category growth and improve market share performance.

Long Haul: This is funded by a 2.5 billion Swiss franc cost savings program called shoot photos.

Long Haul: We'll provide some more details on progress to date.

Long Haul: And finally, we have moved quickly.

Laurent Freixe: Finally, we have moved quickly to put the organization in place and align our teams to deliver our plan. We had a solid finish to 2024, and this gives us a good base as we move into 2025. It is important to keep in mind that we are on a journey, and that it will take time until we are firing on all cylinders. Things are changing and changing fast. At the CMD, we set out how we plan to accelerate performance and transformation by driving operational excellence, unlocking the full portfolio potential, and strengthening our foundations. With this reminder, let's look at what we have been doing to accelerate Nestlé. We started with sharpening the strategy, building on our nutrition, health and wellness foundations, and we put in place the organization to set us up for delivery.

To put the organization in place and aligned our teams to deliver our plan.

Long Haul: We had a solid finish to 2024 and this gives us a good base as we move into 2025.

Long Haul: It is important to keep in mind that we are on a journey.

Long Haul: And that it will take time until we are firing on all cylinders, but sinks are changing and changing fast.

Long Haul: At the same D. We set out how we plan to accelerate performance and transformation by driving operational excellence.

Long Haul: Looking at the full portfolio potential and strengthening our foundations.

Long Haul: With this reminder, let's look at what we have been doing to accelerate nicely.

Long Haul: We started with sharpening the strategy building on our nutrition health and wellness foundations.

Long Haul: And we put in place the organization to set us up for delivery.

Laurent Freixe: We simplified the zone structure, moving from 5 zones to 3 zones, reorganized waters and premium beverages into a global standalone business, and digital and sustainability now report directly to me. From the outside, these changes may sound like simple changes to our reporting segments, but these changes are not at all trivial. Ultimately, they impact 270,000 people. We are not only changing the way we report, we are changing the way we work. It's impressive that we have executed this in a matter of a couple of months, and I want to thank our teams for this. With the plan and the organization in place, we need to make sure everyone is aligned behind the executions. In the last weeks, we have cascaded down the strategy across the organization through what we call our OMP, our Operational Master Plan.

Long Haul: We simplified the zone structure moving from five zones to three zones.

Long Haul: Reorganized waters and premium beverages into a global Standalone business and digital and sustainability now report directly to me.

Long Haul: From the outside these changes may sound like simple changes to our reporting segments.

Long Haul: But these changes I'm not at all trivial ultimately they impact 270000 people.

Long Haul: And we are not only changing the way we report we are changing the way we work.

Long Haul: It's impressive that we have executed this in a matter of a couple of months.

Long Haul: And I want to thank our teams for this.

Long Haul: With the plan and the organization in place we need to make sure everyone is aligned behind the executions.

Long Haul: In the last weeks, we have cascaded down the strategy across the organization through what we call our O N P O operational Master plan.

Long Haul: It sets out in detail.

Laurent Freixe: It sets out in detail the actions and the KPIs behind the objectives with clear targets and owners against each. We have started to track progress through monthly operational reviews. We use the virtuous circle internally as our strategic framework. This picture, annotated with the OMP actions, is something you will find on Nestlé desks around the world. There is a lot that sits behind this. It starts with efficiency and productivity because this is the fuel for the growth engine. Next is investing for growth with appropriate impact so that we deliver growth with the right returns. It is important to reiterate here that we are not waiting until we have all the additional fuel from efficiencies before we start to invest. This all leads to creating shared value, making sure we deliver profitable growth in a long-term, sustainable way.

Long Haul: The actions and to keep your eyes behind your objectives with clear targets had known as against each.

Long Haul: And we have started to track progress through monthly operational reviews.

Long Haul: We use the V at the circle internally as our strategic framework.

Long Haul: This picture I noted with the OMB actions is something you will find on initially desks around the world.

Long Haul: There is a lot that sits behind this.

Long Haul: It starts with efficiency and productivity because this is the fuel for the growth engine.

Long Haul: Next is investing for growth with appropriate impact so that we deliver growth with the right returns.

It is important to reiterate here that we are not waiting until we have all the additional shoot from efficiencies before we start to invest.

Long Haul: And this all leads to creating shared value, making sure we deliver profitable growth in the long term sustainable way.

Speaker Change: I know going to talk to what we have been doing and what we will be doing in these three areas.

Laurent Freixe: I'm now going to talk to what we have been doing and what we will be doing in these three areas. At the CMD, we announced a new three-year cost reduction program, which comes on top of existing annual cost efficiency initiatives. We call this new program Fuel for Growth. We aim to achieve a cost savings of CHF 2.5 billion by the end of 2027. Approximately three quarters of the savings will come from procurement, with the remainder coming from operational efficiencies, and commercial investments. The savings will build from CHF 0.7 billion in 2025 to reach the full run rate savings of CHF 2.5 billion by the end of 2027. Over 300 million of the expected savings for 2025 have already been secured. That is how we are creating the fuel.

Speaker Change: And the C and D. We announced a new three year cost reduction program, which comes on top of existing annual cost efficiency initiatives.

Speaker Change: We call this new program fuel for growth.

Speaker Change: We aim to achieve a cost savings of 2.5 billion Swiss francs by the end of 2027.

Speaker Change: Approximately three quarters of the savings will come from procurement with the remainder coming from operational efficiencies and commercial investments.

Speaker Change: The savings will build from 0.7 billion Swiss francs in 2025 to reach the full run rate savings of 2.5 billion by the end of 'twenty 'twenty seven.

Speaker Change: Oh, the 300 million of the expected savings for 2025 have.

Speaker Change: Already been secured.

Speaker Change: Okay.

Speaker Change: That is how we are creating the shooter no let's look at how we will deploy it to accelerate growth.

Laurent Freixe: Now, let's look at how we will deploy it to accelerate growth. Our midterm ambition is to deliver 4%+ growth. To do that, we need to accelerate the category growth and improve on top our market share. We have four main levers. Expand our winners to reach their full potential, achieve more impact for innovation by scaling our big bets, build new growth engine, and last but not least, address our underperformance. I will dig into how we are progressing on these levers in some of our largest categories. Let's start with coffee. In ready-to-drink coffee, annual sales today are around CHF 1 billion with double-digit growth. Last year, we launched in new markets in AOA, and we are doing the same in Europe and Latin America this year. The new launches are off to a strong start.

Speaker Change: Our mid term ambition is to deliver 4% plus gross.

Speaker Change: To do that we need to accelerate the calorie grows and improve on top of market share.

Speaker Change: We have four main levers.

Speaker Change: Expand our awareness to reach their full potential.

Speaker Change: More impact for innovation by scaling our big bets.

Speaker Change: Build new growth engine.

Speaker Change: And last but not least address our underperformance.

Speaker Change: I will dig into how we are progressing on these levers in some of our largest categories.

Speaker Change: Let's start with coffee.

In ready to drink coffee and you'll say, it's to the around 1 billion with double digit growth.

Speaker Change: Last year, we launched in new markets in a way and we are doing the same in Europe and Latin America. This year.

Speaker Change: The new launches are off to a strong start I was in the middle East recently and I was very impressed by the outstanding in store execution.

Laurent Freixe: I was in the Middle East recently, and I was very impressed by the outstanding in-store execution. Next to RTD, coffee out of home represents annual sales of about CHF 2.5 billion, with an objective to grow at 10%+ annually. We are leveraging all three of our unrivaled brands in Nescafé, Starbucks, and Nespresso. Innovation is key to winning new accounts, and we are launching new machines with enhanced capabilities. For example, we have launched the Nescafé Fusion range in 15 markets across Asia, Europe, and Latin America, and it is now being rolled out to an additional 60 markets. In coffee, we have two innovation big bets. The first, Nescafé Espresso Concentrate, was launched in 2024 in Australia and China and resonated strongly. In 2025, we are now expanding into seven new markets, including the US and the UK.

Speaker Change: Next to our T D coffee out of home represents annual sales of about 2.5 billion Swiss francs with an objective to grow at 10% plus annually.

Speaker Change: We are leveraging all three of our unrivaled brands in this cafe Starbucks endless pretzel.

Speaker Change: Yeah.

Speaker Change: And innovation is key to winning new accounts and we are launching new machines with enhanced capabilities.

Speaker Change: For example, we have launched the next cafe fusion range in 15 markets across Asia, Europe, and Latin America, and it is now being rolled out to an additional 60 market.

Speaker Change: In coffee, we have two innovation big bets.

Speaker Change: The first <unk> espresso concentrates was launched in 2024 in Australia, and China and resonated strongly.

Speaker Change: In 2025, we are now expanding into seven new markets, including the U S and the UK.

Speaker Change: The second.

Laurent Freixe: The second, Nescafé Dolce Gusto Neo, is rolling out to 6 new markets in 2025, and we are launching new machines in existing markets. On underperformance, we have said before that we need to revitalize Nespresso in Europe by increasing availability and visibility. We are expanding our pop-ups and shop-in-shop model, and we are also investing significantly in the new global George Clooney campaign. Turning next to pet care. The category low-growth slowed in 2024, but we continue to expect 4% to 5% in the medium term. For Nestlé, we see a lot of opportunities. In Zone AOA, for instance, we can have a much larger market share than we have today. We are making a substantial investment in capabilities, particularly in market innovation and marketing. Growth accelerated to double digits in the second half of 2024, and we are growing market share.

Speaker Change: Escape figure Triggs sawmill is rolling out to six new markets in 2025.

And we are launching new machines in existing markets.

Speaker Change: On the performance, we have said before that we need to revitalize this breakthrough in Europe by increasing availability and visibility.

Speaker Change: We are expanding our pups and shop in shop model and we are also investing significantly in a new global George Clooney campaign.

Speaker Change: Turning next to Petcare.

Speaker Change: Category growth slowed in 'twenty 'twenty four but.

Speaker Change: We continue to expect 4% to 5% in the medium term.

Speaker Change: Four initially we see a lot of opportunities.

Speaker Change: In June anyway for instance, we can have a much larger market share than we have today.

Speaker Change: We are making a substantial investment in capabilities, particularly in marketing innovation and marketing.

Speaker Change: Gross accelerated to double digits in the second half of 'twenty 'twenty, four and we are growing market share.

Speaker Change: There are puts and takes is already a business of over 600 million Swiss francs and growing strongly.

Laurent Freixe: Therapeutics is already a business of over CHF 600 million and growing strongly. To drive that further, we are expanding investment in science-based innovation and veterinary engagement and scaling up in direct-to-consumer. On innovation big bets, we announced the expansion plans for our unique pyramid-shaped wet cat food earlier this week. We are expanding across the US and launching a new product form in 15 markets in Europe, with more to come in 2026. Nutrition, health, and wellness is a key component of our Nestlé strategy. Our infant nutrition business continues to build on science-based innovation. One of our big bets is Sinergity, a proprietary blend of probiotics and HMOs. We launched the product in 15 markets in 2024, including Hong Kong, Mexico, and Brazil, as well as many markets in Europe. We see much more potential, in particular in AOE and Latam.

Speaker Change: To drive that further we are expanding investment in science based innovation and veterinary engagement and scaling up in direct to consumer.

Speaker Change: On the innovation Big bets, we announced expansion plans for our unique pyramid shaped what get food earlier this week.

Speaker Change: We are expanding across the U S and launching a new product form in 15 markets in Europe with multiple come in 2026.

Speaker Change: Nutrition health and wellness is a key component of our initiative strategy.

Speaker Change: Our infant nutrition business continues to build on science based innovation.

Speaker Change: One of our big bets is she magically proprietary blend of probiotics and hmos.

Speaker Change: We launched the product in 15 markets in 'twenty, 'twenty, four, including Hong Kong, Mexico, and Brazil, as well as many markets in Europe.

Speaker Change: And we see much more potential in particular in a way and let them.

Speaker Change: An hour in the pet format. We are seeing a continued strong turnaround of our Vms business in the U S.

Laurent Freixe: On our underperformance, we are seeing a continued strong turnaround of our VMS business in the US. We have improved availability and are now focused on flawless retail execution and winning back consumers. Finally, on new growth platforms, we see significant potential for nutrition to support healthy longevity and women's health. Overall, you can see that there is a lot of energy and activity behind our growth acceleration plans. Let me also comment on the important topic of creating shared value. Nestlé is the nutrition, health, and wellness company. We enhance the quality of people's lives, playing a role in the diets of everyone, everywhere, at all stages of life. We also have a key role in strengthening the resilience of food systems.

We have improved availability and are now focused on flawless retail execution and winning back consumers.

Speaker Change: And finally on new growth platforms, we see significant potential for nutrition to support healthy longevity and women's health.

Speaker Change: Overall, you can see that there is a lot of energy and activity behind our growth acceleration plans.

Speaker Change: Let me also comment on the important topic of creating shared value.

Initially is the nutrition health and wellness company.

Speaker Change: And it's the quality of People's lives, playing a role in the diets of everyone everywhere at all stages of life.

Speaker Change: And we also have a key role in strengthening the resilience of food systems.

Speaker Change: Today I'm very pleased to say that we are not just delivering on our plans. We are ahead of schedule.

Laurent Freixe: Today, I'm very pleased to say that we are not just delivering on our plans, we are ahead of schedule on two of our most important targets on greenhouse gas reduction and regenerative agriculture. We are creating shared value for all our stakeholders. To close, let me come back to the key messages from today. We are generating the Fuel for Growth and already capturing savings. We are investing to accelerate category growth and improve market share performance with focused resource allocation. We have aligned the organization behind our plan. In short, we are moving fast and Nestlé is changing. Now, let me hand over to Anna to take you through the 2024 results in detail and to the outlook for 2025.

Speaker Change: On two of our most important targets.

Speaker Change: Own greenhouse gas reduction and regenerative agriculture.

Speaker Change: We are creating shared value for all our stakeholders.

Speaker Change: So to close let me come back to the key messages from today.

Speaker Change: We are generating the shortfall grows and already capturing savings.

Speaker Change: We are investing to accelerate category growth and improve market share performance with focused resource allocation.

Speaker Change: We have aligned the organization behind our plan in.

Speaker Change: In short we are moving fast and Nestle is changing.

Anna: Now, let me hand over to Anna to take you through the 'twenty 'twenty four results in detail.

Anna: And two the outlook for 2025.

Anna: Thanks Al and.

Anna Manz: Thanks, Laurent, and good morning. I'm going to cover our performance in 2024 and the implications for 2025. We delivered 2.2% organic sales growth with RIG of 0.8% and pricing of 1.5%. Sales were also negatively impacted by foreign exchange movements due to the strengthening of the Swiss franc. Several factors shaped our sales delivery for the year. Consumer demand softened in 2024. Sentiment has stabilized but remains fragile. Consumer hesitancy towards global brands in Zone AOA had a negative impact of 40 basis points on the group's organic growth. The actions taken to reduce customer inventories in the second half of the year had an additional 20 basis points impact on growth. Pricing was lower in 2024, reflecting a reduction in input cost inflation across most categories, and a return to a more normal promotional environment.

Anna: Good morning.

Anna: I'm going to cover off the phone that's in 'twenty 'twenty, four and the implications for 'twenty to 'twenty five.

Anna: We did have a 2.2% organic sales growth with rack at no, 0.8% and pricing of one 5%.

They also were also negatively impacted by foreign exchange maintenance due to the strengthening of the Swiss franc.

Anna: Several factors shaped her sales delivery city yeah.

Anna: Container demand softened in 'twenty 'twenty four sentiment to stabilize it remains fragile.

Anna: Consumer hesitancy to watch global brands, and Saturday Night L. A had a negative impact of 40 basis points on the great still got it right.

Anna: And the actions taken to reduce customer inventories in the second half. This year has an additional 20 basis points impact on Grace.

Anna: Pricing was lower in 'twenty, 'twenty, four reflecting a reduction in input cost inflation across nice categories.

Anna: And a return to a more normal promotional environment.

Anna: Let me give you a brief summary of the key factors shaping out performance of the segments. This year.

Anna Manz: Let me give you a brief summary of the key factors shaping our performance of the segments this year. In Zone North America, our growth was disappointing. Consumer demand was weak, particularly at the lower end of the income spectrum. We lost share in frozen food, and we were held back in coffee creamers by capacity constraints for most of the year. Our actions to improve competitiveness in these underperforming sales have not yet translated into a meaningfully improved growth trajectory. Despite this negative growth, the zone improved its UTOP margin through mixed management and disciplined cost control while stepping up investments for the future growth. Zone Europe delivered with solid growth, with improving market share trends. As we shared on our nine-month call, Q3 was impacted by delistings linked to temporary customer challenges to price increases, as well as a slowdown in Turkey.

Anna: Yeah.

Anna: In North America of course, that's disappointing.

Anna: Consumer demands this week, particularly at the lower end of the income spectrum.

Anna: We lost share and price and stage and we were held back and coffee creamers by capacity constraints are nice to say, yes.

Anna: Our actions to improve competitiveness in these underperforming south has not yet translated into a meaningfully improved growth trajectory.

Anna: Despite this negative grace deciding and praised this huge atlassian pretty mixed management and disciplined cost control, while stepping up investments in the seat to Grace.

Anna: Yeah.

Anna: So in Europe, you never saw this crisis with improving market share trends.

Anna: I'll, just say that on a nine month call Q3 was impacted by de listings linked to temporary customer challenges to price increases as well as upside down in Turkey.

Anna: Thank you for Gracing praised she got back on the shelf.

Anna Manz: In Q4, growth improved as we got back on the shelf. We're taking more price in 2025, so this may give rise to more customer challenges. Margin improvement in Europe was strong, supported by portfolio management. Zone AOA delivered positive RIG despite multiple macro headwinds. Consumer hesitancy towards global brands in some markets remained a drag through the year, but it's now in the base of comparison as of Q1. The Q4 slowdown in RIG was partially linked to actions to reduce customer inventory. In LatAm, growth was driven by price. The actions taken to manage customer inventory reduced growth in the Q3, but the Q4 bounced back, driven by additional pricing in confectionery and coffee across most markets. In China, a deflationary environment meant that pricing opportunities were limited.

Anna: We're taking more price in 2025. So this may give rise to more cash in their challenges.

Anna: Margin improvement in Europe, with strong sports it by portfolio management.

Anna: Is there no way to live at positive break despite multiple macro headwinds.

Anna: Consumer hesitancy towards global brands in some markets remains a drag through the year, but it's now in the base of comparison as of Q1.

Anna: The fourth quarters say down in rate was partially linked to actions to chase customer inventory.

Anna: In Latam crisis, driven by price.

Anna: Actions taken to manage customer inventory with disgrace in the third quarter, but the fourth course that bounce back driven by additional pricing and confectionery and coffee across nice small cats.

Anna: In China, a deflationary environment meant that pricing opportunities were limited.

Anna Manz: Despite that, the zone delivered solid RIG-led growth, thanks to continued innovation with strong performance in RTD coffee and e-commerce. Nestlé Health Science did exactly what we said it would, with the second half of the year seeing growth accelerate. We've started to see an improvement in the market share trends in VMS and are growing slightly ahead of the category, and that's a category which is growing in high single digits. The growth leverage delivered a step up in margin. Nespresso's solid RIG-led growth was largely driven by the US. Europe posted close to flat growth and remains an area of focus. The broadened Nespresso ecosystem, that's including Starbucks by Nespresso, adds another 100 basis points to growth. By category, the group's growth is driven by coffee, confectionery, pet care, and health science. Coffee delivered mid-single digit growth, led by soluble and RTD.

Anna: But despite that the zain delivered solid recollect Grace.

Anna: Continued innovation with strong performance in RTD coffee and e-commerce.

Anna: And I say, how science did exactly what we said it would but the second half as he I think rice et cetera right.

Anna: We started to see an improvement in the market share trends in V. M S.

Anna: Growing slightly ahead of the cashier Cree.

Anna: That's a category, which is growing in high single digits.

Anna: The gross leverage delivered a step up in margin.

Anna: Especially I saw the Driscoll at Grace is largely driven by the U S.

Anna: Europe posted close to flat Grace and remains an area of focus.

Anna: The broader nespresso ecosystem, that's including Starbucks by Nespresso adds another 100 basis points to cry.

Anna: By category, the grants crisis, driven like coffee confectionery, Petcare and health science.

Coffee delivered mid single digit growth led by soluble and a T D.

Greg and Pat well, it's driven by rig.

Anna Manz: Growth in pet was driven by RIG. As expected, pricing reduced, but it started to stabilize a little in Q4. I've already commented on health science, but nutrition posted positive growth with continued momentum for NAM. Prepared dishes and cooking aids was held back by the performance of frozen food in the US. Milk products and ice cream was impacted by weakness in dairy and coffee creamers in the US. Confectionery growth was driven by pricing. KitKat globally and Garoto in Brazil were the key growth drivers. Turning to profit, just a few things to note here. Margins in coffee and confectionery were primarily impacted by higher input costs. In prepared dishes and cooking aids, the margin increase was supported by higher gross profit margin, driven by portfolio optimization and efficiencies.

Anna: As expected pricing with chase, but it started to stabilize a little in the fourth quarter.

Anna: I've already commented on health science that nutrition posted positive growth with continued momentum for now.

Anna: Prepared dishes and cooking AIDS with help I held back by the performance of fresh and food in the U S.

Anna: No products and ice cream was impacted by weakness in dairy and coffee creamers in the U S.

Anna: Confectionary growth was driven by pricing.

Anna: Kitkat globally and garage here in Brazil, where the key growth drivers.

Anna: Turning to profits just a few things Tonight.

Margins in coffee and confectionery, but primarily impacted by higher input costs.

In prepared dishes and cooking AIDS. The margin increase was supported by higher gross profit margin driven by portfolio optimization and efficiencies.

Anna: No products and ice cream posted lower margins.

Anna Manz: Milk products and ice cream posted lower margins following higher advertising and marketing investments and reduced growth leverage. Water saw a margin reduction impacted by supply constraints. All of these elements come together in our guidance. We're driving change in context of what is clearly a particularly uncertain period. The guidance we're providing today is based on current information on key macroeconomic variables. It doesn't assume further significant movements in commodity prices or foreign exchange rates or the impacts from new tariffs. Our guidance for 2025 is in line with the outlook we gave at our Capital Markets Day in mid-November. To summarize, we expect organic sales growth to improve versus 2024 and strengthen throughout the year as we deliver on our growth plans. Our UTOP margin is expected to be at or above 16% as we invest for growth.

Anna: Following higher advertising and marketing investments I'm, a disgrace suffrage.

Anna: What's the sort of margin reduction impacted by supply constraints.

Anna: Well the thing is out on that it's come together in our guidance.

Anna: We're driving change in context of what is clearly a particularly uncertain perish.

Anna: The guidance, we're providing today is based on current information on key macroeconomic variables.

Anna: It doesn't just inside the significant movements in commodity prices foreign exchange rates or the impact from new tariffs.

Anna: Our guidance for 2025 is in line with the outlook, we gave at our catheter lock it stay in mid November.

Anna: To summarize we expect organic sales growth to increase that's just 2024 and strengthened throughout the year as we deliver on our growth plans.

Anna: Are your top notch and it's expected to be at or above 16% as we invest for growth.

Chris: And with that let me hand back to Chris stuff.

Anna Manz: With that, let me hand back to Christophe.

Chris: Thank you Anna.

Operator: Thank you, Anna Manz. We are now ready to move into the Q&A. Laurent Freixe and Anna Manz are joining me on stage. Now, if you wish to ask a question, there is a hand icon at the bottom of your toolbar. Then once I call on you can unmute yourself. You will be placed back on mute after your question is answered. May I please ask you to only ask two questions at once so everybody has an opportunity to speak. I see there's already one question on the screen from Jakob Blume, Handelsblatt. Good morning, Jakob. Please go ahead.

Chris: Now ready to move into the Q&A.

Chris: Hmm.

Chris: And I know attorney me on stage now if you wish to ask a question. There is a hand I can at the bottom of your toolbar.

Chris: And then once I call on you you can on mute yourself.

Chris: Will it be placed back on mute. After your question is answered and May I. Please ask you to only and ask two questions at once so everybody has an opportunity to speak and I see there's already one question on the screen from Yaacov blew me hundreds of block of money.

Speaker Change: Yakov. Please go ahead.

Jakob Blume: Hi. Good morning. Thank you very much for taking my question. My first question would be, have you thought about the impacts of potential tariffs in the struggling US market, one? Two, you have around, maybe correct me if I'm wrong, but you have around 30 billionaire brands who account for a large share of the revenue and 1,900 sort of minor brands. Do you consider at all selling brands who are underperformers or. Thank you very much.

Yaacov: Hi, Good morning. Thank you very much for taking my question. My first question would be.

Speaker Change: Have you thought about that.

Speaker Change: Oh potential terrorists and.

Speaker Change: In the restaurant and been struggling a U S market, one and two.

Speaker Change: And you have around.

Speaker Change: Maybe correct me if I'm wrong that you have around 10 30 billionaire brands.

Speaker Change: So who account for a large share of the revenue and 19 hundreds of them minor brands and.

Speaker Change: Do you consider at all yeah, selling brands, who are on a pro forma or.

Speaker Change: Yep. Thank you very much.

Laurent Freixe: Thank you. Thank you, Jakob. On the question of the tariff, as you can imagine, we are monitoring the situation on a daily basis, and we are on top of it. When it comes to global trade and tariffs, I think we are in a unique privileged position, which is giving us resilience to significant movements. Let me explain why. We have had always that strategy that we make, so we produce where we sell. That makes that if you take the two biggest blocks economically, and I could include Europe in the same landscape, let's say US, China, but also Europe, everything almost that we sell, we make in the given geography.

Speaker Change: Thank you. So thank you Jakob on the question of is dairy if as you can imagine we are.

Speaker Change: Monitoring the situation are.

Speaker Change: On the on a daily basis and are and we are on top of it.

Speaker Change: When it comes to global trade and tariffs I think we are in the unique privileged position.

Speaker Change: Which is a.

Speaker Change: Giving us a resilience to a significant movements.

Speaker Change: And let me explain why.

Speaker Change: We have had always that strategy that we make so we produce where we sell it.

Speaker Change: And that makes that if you take the two biggest blocks.

Speaker Change: Couldn't immediately and it could include Europe in the same.

Speaker Change: Landscape.

Speaker Change: Let's situates, China, but also Europe.

Speaker Change: Everything almost that we said.

Speaker Change: We make.

Speaker Change: In the given geography, so almost everything we sell in the U S more than 90% is produced in the U S. So.

Laurent Freixe: Almost everything we sell in the US, more than 90% is produced in the US, so immune to tariff. More than 90% of what we sell in China is produced in China, so immune to tariff. A similar dimension to Europe, where you would see more, of course, free trade within the economic space. We have that unique strength and that unique position. On the brands, what we want to do is to put the focus on the core brands. They can be the 31 billionaire brands, you're right, but it can also be local iconic brands. Think of Thomy in Switzerland, for instance, which is part of the consumer landscape, or Garoto in Brazil or, you know, many other brands that we got in the portfolio.

Speaker Change: So immune to that.

Speaker Change: More than 90% of what we sell in China.

Speaker Change: It's produced in China, so immune to dairies.

Speaker Change: And the similar dimension to Europe, where you would see more of course free trade within the economic space. So we have that unique strengths in that unique position on the brands. What we want to do is to put the focus on the on the core brands. So they can be the city one.

Speaker Change: [noise] billionaire brands, you're right, but it can be also.

Speaker Change: Local like Clinique brands think of Tommy in Switzerland for instance, which is part of the consumer landscape Oh, two in Brazil or are you know.

Speaker Change: Many of the brands that are we going to end up in the portfolio. So what we want to support those core brands the global ones and the local wants and it's clear that in the focus some brands will get less reports.

Laurent Freixe: What we want is support those core brands, the global ones and the local ones. It's clear that in the focus, some brands will get less support, and the idea is to pull them through promotional activities, trade activities. When it comes to movements in the portfolio of brands, that's something that we are always constantly reviewing to make sure that we have in the portfolio categories and brands that can contribute to our sustainable, profitable growth agenda.

Speaker Change: And the idea is to pull them through our promotional activities trade activities.

Speaker Change: When it comes to.

Speaker Change: Movements in the portfolio of brands. So that's something that we are always constantly reviewing to make sure that we have in the portfolio categories and brands that can contribute to a sustainable profitable growth agenda.

Operator: Thank you very much. Thank you, Jakob, for your question. The next question is from Isabel Strassheim, Tages-Anzeiger. Isabel, please go ahead.

Speaker Change: Thank you very much. Thank you Yakov for your question and the next question is from he's a bad sign package answer I guess.

Speaker Change: He's a bell. Please go ahead. Thank you Hello, good morning, everybody.

Isabel Strassheim: Thank you. Hello, good morning to everybody. I have two questions, please. One is on your pricing. You stated that in the US, in the second half, the pricing got negative. In comparison to Europe, growth mainly was led by pricing. I'm wondering, will that stay in the current year? What's your expectation? How will you be able to increase your prices in the US again, and will it remain in Europe? The second question is a different topic, please. It's on your savings. You will change your supplier management. I've read that. If Mrs. Manz told us during the Capital Markets Day that it was changing to a single supplier globally, could you give some examples on that? I'm wondering as well whether it is linked as well to commodity sourcing. Okay, thank you so much.

Speaker Change: I have two questions. Please one is on your pricing you stated that in the U S. In the second half.

Speaker Change: Oh, the pricing Gotcha gotcha.

And Connor comparison to Europe close neighbor.

Speaker Change: So I'm wondering will that stay in the challenge here, what's your expectation how will you be able to increase your classes in DRAM.

Speaker Change: Mhm to remain <unk> and.

Speaker Change: And the second question different topic. Please.

Speaker Change: When you say easily.

Speaker Change: We are and Changsha supplier.

Speaker Change: So Easter.

Speaker Change: This is Mike.

Speaker Change: Mom tell at all.

Speaker Change: Turning to marketing.

Speaker Change: Changing to a single supplier cloud could you give some examples on that.

Speaker Change: Pondering as well that's it.

Speaker Change: Is that true commodity staci.

Okay. Thank you so much.

Laurent Freixe: Yeah. Thank you for the question. On the pricing environment, it depends on the context. It depends also on the portfolio. You would see Europe, for instance, very exposed to coffee, confectionery as well, chocolate, are significant categories. In the US, we hardly have any chocolate in the portfolio, and coffee is sizable, but by and large, the largest category is pet care, and we go to a sizable food business. That explains different dynamics by geography. When it comes to the US, we have decided, and you might see more of that, we have decided to price right and to price in prices in areas where maybe we got out of consideration from the consumers.

Speaker Change: Yeah. So thank you for.

Speaker Change: For the question.

On the pricing environment it depends on the context. It depends also on the portfolio. So you would see Europe for instance, very exposed to coffee.

Speaker Change: The conflicts for me is we had to call. It a significant categories in the U S. We hardly have any chocolate in the port for you and.

Speaker Change: Coffee is sizable but by and large the largest category is pet care and we go to suit a sizable food business. So that explains the different dynamics by geography are when it comes to the U S who have decided that and you might see more of that we have decided to.

Speaker Change: Me too.

Speaker Change: Price right and to invest in prices in areas, where maybe a we got out of consideration from the consumer as you know that when you pass a certain price point vis vis competition.

Laurent Freixe: You know that when you pass a certain price point vis-à-vis competition, consumers will turn their back and start to buy potentially competition. On pizza, for instance, we realized that we had to adjust our pricing to be more attractive, to be more competitive, and to be in the consideration set by the consumers, and we did those adjustments. Expect that to happen as well in 2025, that we might invest also in pricing. We want to invest in quality, we want to invest in pricing, we want to invest in visibility of our brands, we want to invest in consumer engagement. It's not just marketing that will increase. It's the entire span of the value equation that we are investing on.

Okay.

Speaker Change: Consumers will turn their back in and start to buy but then she didn't competition. So on pizza for instance, we are realized that we had to adjust.

Speaker Change: Oh pricing to be more attractive to be more competitive and to be in the consideration set by the consumers and we did do the adjustment expect that to happen as well.

Speaker Change: In the 2025 that we might invest also in pricing we want to invest in quality, we want to invest in pricing, we want to invest and visit with you all the brands we want to invest in consumer engagement is not just marketing that would increase it is the entire span of the value equation that we are investing on.

Laurent Freixe: Now it's clear that when it comes to coffee and chocolate, as input costs have further increased, you should see some pricing. Same story, we will try first to mitigate through our productivity cost savings programs the impact of input costs, and we'll price right. The idea is to price right in the competitive environment. Everyone is impacted. I think if anything, in terms of the coffee, the fact that we sell essentially coffee capsules, soluble coffee out of home, ready-to-drink coffee, where the component of green coffee cost is less than for roast and ground players, is rather a competitive advantage.

Speaker Change: Now, it's clear that when it comes to coffee and chocolate as input costs have increased visit increase you should see some pricing, but same story, we will try first to mitigate through all productivity cost savings programs are the impact of input cost and we'll price right.

Speaker Change: So the idea is to price right in the competitive environment everyone is impacted.

Speaker Change: If anything I think in terms of the coffee the fact that we sell essentially coffee capsules.

Speaker Change: Suitable coffee coffee outperformed raises the coffee, where the component of green coffee cost.

Less than four roasting ground players.

Speaker Change: It is rather a competitive advantage in sync of chocolate, what we push and whats driving what we know they don't these essentially the space, where we combined chocolate and wafers are triggered and discrete the chocolate bakery space the food could be discrete space and then the cocoa cost component also plays a smaller.

Laurent Freixe: Think of chocolate, what we push and what we drive and what we innovate on is essentially the space where we combine chocolate and wafers or chocolate and biscuit, the chocobakery space, the choco bi-biscuit space. There, the cocoa cost component also plays a smaller role. Those are the critical points. What was the-

Speaker Change: Yeah.

Speaker Change: So those are the critical points with was the.

Operator: Supplier.

Speaker Change: Yeah, Oh, sorry.

Laurent Freixe: Supplier. On suppliers, maybe we didn't explain well. We want to consolidate globally some categories where we were buying more locally, and there are some categories that you have a scale advantage when you buy globally, you know. There is the relationship between the volume that you buy and the price that you get. We are looking at that. Generally speaking, we don't want to enter into a sole supplier relationship because when we enter in a sole supplier relationship, we create also dependency. We could say that we create interdependency, yes, but we want to rather strengthen our bargaining power on the one end, and we want also to diversify in an environment where global trade is impacted, we want to diversify the sourcing.

Speaker Change: Yeah.

We so maybe we didn't explain well.

Speaker Change: We want to consolidate globally, some categories, where we were buying more locally.

Speaker Change: And and there are some categories.

Speaker Change: He'll advantage when you buy globally you know there is a relationship between the volume that you buy and the price that you get so we are looking at that but generally speaking we don't want to enter into a sole supplier relationship because when we enter in a sole supplier relationship we create.

Speaker Change: So dependency, we could say that we create.

Speaker Change: The inter dependency, yes, but we want to.

Speaker Change: <unk> strengthened our bargaining power on the one in the end we want also to diversify.

Speaker Change: In an environment, where global trade is impacted we willing to diversify the sourcing. So there is a product of yes, more consolidation, where it makes sense, but we want more than one option.

Laurent Freixe: There is a product of, yes, more consolidation where it makes sense, but we want more than one option, in terms of the supply and in terms of origin of the supply. We would like to have systematically at least one local option in case of disruption to global trade.

Speaker Change: In terms of the supply in terms of origin of the supply and we would like to have systematically at least one local option in case of disruption to global trade.

Operator: Thanks a lot. Thank you, Isabel. The next question is from Claudia Stahel at Swiss Radio.

Speaker Change: Thanks, a lot. Thank you Isabel and the next question is from Claudia style.

Speaker Change: Radio.

Claudia Stahel: Hi, this is Claudia Stahel. I'm the TD correspondent for China. My two questions are China-related. First question is we saw a deflation environment in China in 2024, and this continues in 2025. What do you expect when it comes to consumption for 2025? I had a bit closer look at the results for China, and I'm curious about pet care, why pet care didn't grow so much in 2024, because in 2023 it was growing in two digits, and demand was also not very well in 2023. I'm wondering why pet care is not doing that well right now in China because it should, because pet care is growing quite a bit in China despite the environment because a lot of people are not having children and are having pets.

Speaker Change: Hi, I, just don't have the T D correspondent and for China. So my two questions are China related first.

Speaker Change: Question is we saw a deflationary environment in China in 'twenty four and this continues in 25. So what do you do you expect when it comes to consumption 425.

Speaker Change: And I have to be closely look at the results for China, and I'm curious about and.

Speaker Change: Petcare why pet care and feeding.

Speaker Change: You know so much incentive for a coffee 23, it was growing in two digits.

Speaker Change: And.

Speaker Change: Demand was also not in their email in 'twenty.

Speaker Change: So each one wondering why.

Speaker Change: Pet care, it's not doing that right now in China, because it should.

Speaker Change: Because petcare it can always be quite.

Speaker Change: Quite a bit in China, despite and diamond.

Speaker Change: Because I know a lot of people are not having children and are happy to pay.

Laurent Freixe: Yes. Thank you very much for the two questions. I think globally on China, we are in a dynamic that looks a little bit like Japan. A population is not growing anymore, population is aging, and we see that there are significant deflationary pressure. There is a lot of competition. The market is very active, very competitive, and all of that creates an environment where there is not much pricing. That should continue. I think the trend is rather a long-term trend. The currency also is pretty solid. That's the environment in which we operate. The good thing is that we are capable to drive volume growth, to drive volume mix growth in that kind of environment. When it comes to pet care, you're right.

Speaker Change: Yes. Thank you very much for the two questions.

Speaker Change: I think globally on China, we are in a dynamic that looks a little bit like Japan.

Speaker Change: A population that is not doing any more population is aging.

Speaker Change: We see that are they are significant deflationary pressure there is a lot of competition in the market. These are very very actually very competitive and all of that creates an environment, where there is not much pricing. So that should continue I think the trend is.

It is rather a long term trend of currency also is pretty pretty solid. So that's the environment in which we operate the good thing is that we are capable to drive.

Speaker Change: Our volume growth to drive mix grows.

Speaker Change: In that kind of environment when it comes to pet care.

Laurent Freixe: All the trends go in the direction of pet care growing in China, more urban population, more aging population, less babies, more pets, and more caloric coverage. We have identified that. This is a priority for us. What you read in the 2024 numbers is a more short-term dynamic, but the focus on growing at pet care in Asia and in China is absolutely front and center, and we concur with your views that there is tremendous potential in the category.

Speaker Change: You're right all the trends are going the direction, the pet care growing in China, more or buying population more aging population lives babies more pets and more calories. She coverage. So we have identified that this is a priority for us what you read in the 20th.

For the full numbers is a more of a short term dynamic, but the focus on growing our pet care in Asia and in China is absolutely front and center and we concur with your views that there is tremendous potential in the category.

Operator: Thanks a lot. The next question is from Sonja Wind, Bloomberg. Please go ahead, Sonja.

Speaker Change: Thanks, a lot. Our next question is from Sean Yeah, Vince Bloomberg. Please go ahead Sonya.

Sonja Wind: Hello. Thank you very much for taking my question. I would be curious to know what's your hunch for the inflation development. So can you tell us a bit more, what are you modeling? What are you preparing for? Do you expect inflation to increase? Also, to come back to the topic of tariffs, you said that 90% of the product in the US and China is made locally, but what about the raw materials? Because you import that from elsewhere. So can you tell us a bit more about the proportion that comes from there and the impact that you see? If I could squeeze in like one question for my understanding. You mentioned that your guidance does not assume any further significant movements in tariffs.

Speaker Change: Thank you very much for taking my question and I would be curious to know what's your hunch as far that inflation development. So can you tell us a bit more what are you modeling what are you preparing for do you expect inflation shrink trees.

Speaker Change: And also and it will come back to the topic off parents used at that 90% of the product in the U S and China is made locally, but what about the raw materials, because Jim Parker from elsewhere.

So can you tell us more about the proportion of kind of swung back and the impact that you see and yeah, and if I could squeeze in one question I'm for my understanding you mentioned that you're too.

Speaker Change: No our guidance does not assume any significant movements and Paris.

Sonja Wind: If there were tariffs to be extended to Europe, would that mean you have to change your guidance? Thank you very much.

Speaker Change: And so if it were to be extended to Europe, and what that means you have to change our guidance. Thank you very much.

Laurent Freixe: Thank you very much for the question. I think it's a perfect question for Anna.

Thank you very much for the question I think it's a perfect question for I don't know [laughter].

Anna Manz: In terms of inflation, look, it's something we monitor closely, and we stay very focused on the actions that we can take, which is around pricing, and making sure that we are navigating that irrespective of inflation. It's very hard to predict what's gonna happen, in the context of some of these tariff moves. I mean, that could change the inflationary environment relatively considerably. Our focus is really on the executional piece, delivering for consumers irrespective of the environment we're in, and then responding to the environment as it changes. In terms of, while I'm on tariffs, we were quite clear in our guidance today that we were excluding the impact of tariffs because it's actually very hard to know, exactly what will or won't happen.

Speaker Change: In terms of inflation.

Speaker Change: Look it's something we monitor closely and we stay very focused on the actions, we can take which is around pricing and making sure that we are navigating that irrespective of inflation, it's very hard to predict what's going to happen in the context of some of these terrorists Nathan I mean that could change the inflationary environment that is.

Speaker Change: Considerably so I'll say it this is really on the education of pace delivering to consumers irrespective of the environment. We're in and then responding to the environment as it changes.

Speaker Change: In terms of one of them on tariffs, we were quite clear in our guidance today that we were excluding the impact of tariffs because it's actually very hard to know exactly what will why it happened so.

Anna Manz: We're guiding really on a steady state environment, and we'll see how that plays out. That said, you know, you heard from Laurent that a lot of our manufacturing is local, and we have lots of mechanics therefore to mitigate any tariffs that we do see come through, be it pricing, be it changing our sourcing. In terms of China with respect to raw materials, again, we look to source locally where possible. I'm not gonna get into all of the specifics, but those are areas where we naturally, actually, are always looking to make sure that we're diversifying where we're sourcing raw materials from so that we are well-positioned in the event of changes.

Speaker Change: So we're guiding ready Oh no.

Speaker Change: Study stations I mentioned, we'll see how that plays out that said you know you had from neuro that a lot of our manufacturing cycle and we have lots of mechanics. Therefore to mitigate any tariffs are that we do see a country be it pricing be it changing outsourcing.

Speaker Change: In terms of China with respect to raw materials again, we'd look to so slightly last possible I'm not going to get into all the specifics.

Speaker Change: And that those are areas, where we are not sure. They actually are always looking to make sure that we're diversifying and why we're so ashamed raw materials from say that we are well positioned in the event of changes.

Operator: Thanks a lot, thank you, Sonja, for your question. If you wanna ask a question, please raise your hand at the bottom of your toolbar. There is another question, Johannes Ritter from the Frankfurter Allgemeine Zeitung. Good morning, Johannes.

Speaker Change: Thanks, a lot and I. Thank you Sonya for your question and if you want to.

Speaker Change: Ask a question. Please raise your hand at the bottom of your toolbar and there was another question hundreds director from the unfortunate Allgemeine.

Johannes Ritter: Good morning. Thank you. Judging by the development of the share price, the market does not yet seem to have confidence in your new strategy. How do you comment on this? Looking at your water business in France, it still continues to produce headlines. Are you afraid that you will have to close your Perrier plant in Vergèze? One last broader question, there are increasing reports about the negative health effects of highly processed food. Are you already seeing this in your sales, or you expect that this could affect your business in the medium to long term?

Speaker Change: Hum.

Speaker Change: Good morning, Thank you.

Speaker Change: Judging by the development of the shaft.

Speaker Change: Price.

Speaker Change: Market does not yet seem to have confidence in your strategy. How do you comment on this.

Speaker Change: Looking at your automotive business in France Hum.

Speaker Change: <unk> continues to produce headlines are you afraid that you will have to close your.

Speaker Change: And in that case and last broader question.

Speaker Change: Our increasingly talks about the negative effect.

Speaker Change: Highly processed food.

Speaker Change: Are you already seeing this and you'll see or you expect that this could affect your business in the medium to long term.

Laurent Freixe: Yeah. That's many, many questions in one. On the share price, look, I think we laid out very clearly our strategic direction, our strategic priorities at the Capital Markets Day. Since then, this is the first time that we communicate results. I think there was a little bit this perspective from the analysts and investors community that, okay, the strategy looks coherent. It makes sense, but we want to see the results. Bear with us a little bit. The results are coming. This is the first time we produce results for the full year. Keep in mind that I was appointed early September and that the results are Q4. Of course, product of the dynamic that we had and the greater focus on execution.

Speaker Change: Yeah. So there's many many questions in one.

Speaker Change: One on the share price.

Speaker Change: Yeah.

Speaker Change: I think we laid out very clearly our strategic direction and our strategic priorities at the capital market day and since then this is the first time that we communicate results and I think there was a little bit this perspective from the analysts and investor community that okay. The strategy looks.

Speaker Change: At career and it makes sense, but we want to see the results.

Speaker Change: So bear with us a little bit the reserves are coming this is the first time you produce results for the full year, but keep in mind the ER I was appointed.

Speaker Change: The early September and that the results are quick to for so of course product of a dynamic that we had then the greater focus on execution.

Laurent Freixe: You will see in the quarters to come, the results materialize, and this is why we put so much also focus and emphasis on following up on the initiative that we laid out. I guess, through that, we will build up confidence and we see that the reactions actually are getting increasingly positive. On the waters issue in France, I think we face a situation where we have an inadequacy between the reality of the production and what the regulation says. We call for a technical debate so that there is agreement on how we secure that mineral water and, generally, water or water beverages are delivered in a safe way to the consumers, which we have secured at all times while respecting regulations.

Speaker Change: But you would see in the quarters to come the results materialize and this is why we put so much focus and emphasis on following up on the initiatives that we laid out so I guess through that we will build the confidence and the and and and we see that the reactions sexually are getting.

Speaker Change: Increasingly positive.

Speaker Change: On the water as a issue in force I think we face a situation where we have the question between the reality of the production and what the regulation says so we called for a technical debate. So that there is agreement on how we do we secured that.

Speaker Change: With the <unk>.

Speaker Change: And generally our water all worth of beverages that are delivered in a safe way to the consumers, which we have secured at all times why do respecting regulation. So there is there is a need to address that issue.

Laurent Freixe: There is a need to address that issue. I hope that we will not have to close Vergèze because it would be a drama for not only Vergèze, by the way, in the region, but that would be a drama for the industry in France and possibly beyond. Because you know, it's not only Nestlé which is at stake there, this is an industry question. The third point was.

Speaker Change: I hope that we will not have to close their head because it would be a drama for not only there is by the way in the region, but I would be a drama for the.

Industry inflows and possibly beyond.

Speaker Change: Because you know its not only initially which is at stake there. This is an industry question.

Speaker Change: And the the Sip point towards yes.

Anna Manz: On processed food.

Operator: On processed food.

Laurent Freixe: Yeah, on processed food. This is a debate that we follow very closely. I think it's very important to keep in mind that processed food has accompanied the progress of the industrial revolutions. With the industrial revolution came the urbanization, and we had the need to bring safe food to people living in urban areas. The population moved from living in the countryside to moving in urban areas and without access to fresh food. Providing processed food was very critical to that and has also allowed to fight the foodborne diseases. People forget that, you know, there were people getting really sick or even passing away from food contamination, food poisoning.

Speaker Change: As food Yeah. This is a this is a debate that we follow very very closely I think is very very important to keep in mind.

Speaker Change: That processed food.

Speaker Change: As a complaint I the progress of the industrial revolutions within destroyed Revolution came to your button Ization and we had the need to bring safe food aid to people living in urban areas. The population move from living in the countryside to moving and nobody areas and without access to fresh food.

Speaker Change: So providing processed food was very very critical to that and is also a low to find the food borne diseases people forget that our you know what they were they were people getting really seek or even passing away from food contamination food poisoning and and we know that food doesn't keep soon.

Laurent Freixe: We know that food doesn't keep so well, so fridges were so important, sterilization was so important and helped fight all those diseases. It's important to bear in mind that those are really critical. The third dimension is that it helps keep the food. You know that one third of the food produced globally today is wasted in a context where more than 2 billion people on the planet suffer from food security, do not have access to food in sufficient quantity to be healthy. It is a shocking data. If there is no food processing, well, the problem is multiplied by X. Food processing is very important.

Speaker Change: So fridges were so important sterilization were so important and help fight all those diseases. So it's important to bear in mind that those are really critical in the intercept dimension is that it helps keep the food.

Speaker Change: And are you know that one said that the food produced globally today is wasted in a context, where more than 2 billion 2 billion people on the planet suffer from.

Speaker Change: Food security do not have access to food distribution quantity.

Speaker Change: To be healthy.

Speaker Change: It is a shocking data if there is no food processing well the problem is multiplied by ex <unk>. So food processing is very very important no. When it comes to the debate I think it's important to move from a the discussion around calories discussion around nutrition, we are the nutrition health.

Laurent Freixe: Now, when it comes to the debate, I think it's important to move from the discussion around calories to the discussion around nutrition. We are the nutrition, health and wellness company. We play a role in the lives of everyone at every stage of life, from early ages down to aging, or people that have medical conditions, and we can play a role there. Look at our portfolio. Our portfolio is very, very well geared towards that. Any agenda that is focused on healthy lifestyles, healthy diets is our agenda as well, and we feel rather supported by those discussions. We want to make sure that food processing is not demonized because food processing is so critical.

Speaker Change: When this company we play a role in the lives of everyone. At every stage of life from early age is down to edging. It Oh people that ive medical conditions, and we can play a role there and look at the whole portfolio of who is very they will get the weather. So any agenda that is focused on.

Speaker Change: Healthy lifestyles healthy diets, either origin does well and we feel our raws are supported by the those.

Speaker Change: Discussions are but we want to make sure that the food processing is no demonize because food processing is so critical and there is no food processes.

Laurent Freixe: If there is no food processing, I think there is a real issue and a real risk to mankind.

Speaker Change: Assessing I think there is a really shoe and a real risk to mankind.

Speaker Change: Yeah.

Operator: The next question is from Sophie Marenne, L'Agefi. Sophie, please go ahead.

Speaker Change: The next question is from a stuffy line unless you see.

Sophie Please go ahead.

Sophie Marenne: Hi, everyone. I have two quick questions. First, for three years now, we've seen the price increase, they've been the engine of your growth, you know. With the internal growth rate that you present today, are you confirming that the trend is finally reversing? When do you expect the impact of the RIG on growth to exceed the price impact? You know, when will the two line starting to reverse? The other question is on the United States. Can you detail the reason of the weak performance, maybe give examples of products that underperform? You know, I think you mentioned pizza, but is there other? Thank you so much.

Speaker Change: Yeah, Hi, everyone.

Speaker Change: So I have two quick questions. So first and for three years now we've seen the price increase and they've been the engine of growth and with the Indian Inconel suite that you presented today are you confirming that the trends is finally reversing and when do you expect the impact of the.

Speaker Change: And I think on gross to exceed the price impact.

Speaker Change: Well the two line when those two line and starting to reverse and the other question is on the.

Speaker Change: The United States can you.

Speaker Change: The other reason of the weak performance maybe give examples of projects that ended before him. You know I think you mentioned you had the Easter Oh there. Thank you so much.

Laurent Freixe: Thank you. Let me hand over to Anna for the price RIG equation.

Speaker Change: Thank you so let me hand over to enough for a.

Speaker Change: The price we got a question.

Anna Manz: Sure. You've seen us take actions to make sure that we're really driving RIG momentum, and we've seen an improvement in RIG momentum through the year. Now, our focus on driving market share and consumer penetration will continue and is right at the heart of all of the operational changes that Laurent laid out at the Capital Markets Day. That said, as we come into 2025, we've got some very significant inflationary pressure on cocoa and coffee. In those categories, we will be taking price in the context of the commodity costs going up. Exactly what the balance of RIG and price will be, we'll see as we go through the year, and it'll depend on the consumer response to some of that pricing. In the US?

Speaker Change: So say you've seen us take actions to make sure that we're really driving regular lunch and then we've seen an improvement in ROIC momentum through the year now and our focus on driving market share and consume a penetration will continue and it's right at the harsh says Oh, let's see.

Speaker Change: No change is that not all a dash at the capital markets day that said as we come into 2025, they've got some very significant inflationary pressure on cocoa and coffee.

Speaker Change: In those categories, we will be taking price in the context of the commodity cost going up say exactly what the balance of Reagan price. So they they'll say you see guys see yet and it will depend on the consumer response to some of that pricing.

Speaker Change: Okay.

Laurent Freixe: On the US, well, I think the frozen part has been under pressure, but we are taking actions on every part of the value equation, investing in quality, investing in pricing where we need to do it, investing in rebuilding distribution as we lost some distribution along the way, and investing in brand communication with on top investments in innovation. We are really pulling all the levers to strengthen the attractiveness of our brands and turn around the growth strength.

Speaker Change: In the U S.

Speaker Change: On the U S are well.

Speaker Change: Well I think the the frozen part has been under pressure.

Speaker Change: Taking actions on every part of the value equation investing in quality investing in pricing, where we need to do at investing and rebuilding distribution as we lost some distribution along the way and investing in brand communication wisdom top investments in innovation. So we are really pulling all day.

Speaker Change: This adds to our strengths and the attractiveness of our brands and turnaround the gross strength.

Anna Manz: Maybe one to build on that. You asked about the overall strength of the US, and 60% of our businesses are performing very well. You've got a challenge in frozen that we've talked about, and we've also talked through the year around supply constraints around the creamers business, which has held us back in 2024, but that we now have the new plant online, so you should see improve as we work through 2025. Okay, thanks.

Speaker Change: Well build on that you asked that he has little chance if the U S and 60% of our business is performing very well he's got a challenging fashion that we've talked about and we've always say to it through the air around supply constraints around the Creamers business, which has held us back in 2020. So that we now have the new plant online. So you.

Speaker Change: I'd say and previously backs from 'twenty to 'twenty five.

Operator: Thank you. Thank you, Sophie. The next question is from Rahel Richterich, AWP.

Speaker Change: Okay. Thanks.

Sophie: Thank you Sophie.

Speaker Change: The next question is from Oh, Shannon, who used to fish are entrepreneurs.

Rahel Richterich: Good morning. I'm coming back on the waters activities. On Nestlé Waters that was recently reorganized into a standalone entity. What are the plans for this entity now? Are you, for example, planning to sell this entity?

Shannon: Good morning, I'm coming back on the water activities and Nestle waters that was recently reorganized on a stumbling on June 19th.

Shannon: What are the plans for this year 19 now are you for example, I'm planning to sell this year 19.

Laurent Freixe: Yeah, thank you for the question. I think the fact that the organization that has been announced only three months ago at the Capital Markets Day is organized, is staffed, and is operational shows at what pace Nestlé is moving. This unit is up and running, and they are already working not only at managing the business and addressing any issues that they may face, but they are working also on the next phase, which is getting organized to engage in the partnership discussions that we would like to achieve. We are committed to the space. We believe in waters and premium beverages as part of healthy diets. This is part of our nutrition, health, and wellness strategy.

Shannon: So yeah. Thank you for the question and I think.

Shannon: The fact that yoga amortization that has been announced only three months ago.

Shannon: At the capital market day is.

Shannon: Organized is stuffed and his operational shows at what pace nicely is moving.

Shannon: So this unit is up and running and they're already working not only at managing the business.

Shannon: And addressing any issues that they they may face, but they are working with some of the next phase which is.

Shannon: Getting organized to engage in the partnership discussions that we would like to we would like to achieve we are committed to this space we believe in them.

Shannon: What does and the premium beverages as part of healthy diets. This is part of our nutrition health and wellness strategy. We are committed to the brands. So we exclude the an outright sale, but we look for any form of partnership to strengthen our business to be able to invest in our business.

Laurent Freixe: We are committed to the brands, so we exclude an outright sale, but we look for any form of partnership to strengthen our business, to be able to invest in our business, to grow the premium brands like S.Pellegrino, Perrier, Acqua Panna, but also to grow the space which is massive in terms of the opportunity, which is the premium beverage space, CHF 1 trillion, which requires investment. This is the agenda that we have ahead of us. Keep in mind that we are committed to the space. We look for partnerships on how we can enhance and realize the potential of the category.

Shannon: To grow the premium brands like some pellegrino Perrier panel, but also to grow this space, which is which is which is massive in terms of the opportunity which is the premium beverage space one trillion.

Shannon: Which requires investment. So this is the agenda that we have ahead of us keep in mind that we are committed to this space. We look for partnerships on how we can enhance and realize the potential of the category.

Operator: Thank you. It looks like there are no further questions. In that case, that concludes our press conference. Of course, you can reach out to the media office anytime via phone or email. Thank you very much. With that, I'm handing over to Laurent for the closing remarks.

Shannon: It.

Shannon: Thank you it looks like there are no further questions and in that case that concludes our press conference of course, you can reach out to the medium fish anytime via phone or email.

Long Haul: Thank you very much and with that I'm handing over to long haul for the closing remarks. Thank you very much for your interest you you can see that our results are solid the that the plans that we laid out at the capital market. The all materializing, we are putting the focus on.

Laurent Freixe: Thank you very much for your interest. You can see that the results are solid, that the plans that we laid out at the Capital Markets Day are materializing. We are putting the focus on achieving efficiencies, cost savings. Our Fuel for Growth program is moving at pace. We are starting investing in our growth platform, in our innovation big bets. The organization is aligned through our Operational Master Plan and moving in the right direction. I'm confident that although it takes time to move the needle, you will see Nestlé moving at pace in the right direction as we have shown it in that publication of the results and in our plans going forward.

Long Haul: Achieving efficiencies cost savings a full four gross program is moving at pace.

Long Haul: We have started investing in our growth platform, you know innovation big bets.

Long Haul: And the organization is aligned.

Long Haul: Through our operational Master plan and and moving in the right direction. So I'm confident that the although it takes time to move the needle.

Long Haul: You'll see initially moving at pace in the right direction as we have shown it in the communication of the results in the in our plans going forward.

Long Haul: Okay.

Long Haul: Yeah.

Long Haul: [music].

Long Haul: Yes.

Long Haul: [music].

Long Haul: Okay.

Long Haul: [music].

Long Haul: Yes.

Long Haul: [music].

Long Haul: Okay.

Long Haul: [music].

Long Haul: Yes.

Long Haul: [music].

Long Haul: Okay.

Long Haul: [music].

Operator: Good morning, everyone. Welcome to Nestlé's Full Year Results Press Conference. Thank you for joining us this morning. With me here today are Laurent Freixe, our CEO, and Anna Manz, our CFO. Before we get started, let me remind you of a couple housekeeping items. You are currently placed on mute. You will be invited to ask questions after the presentations. Now, please take a moment to read the disclaimer on your screen. Thank you. With that, let's now move into the prepared remarks from Laurent and Anna.

Long Haul: Good morning, everyone welcome to naturalists full year results Press conference.

Long Haul: Thank you for joining us this morning with me here today are normal fix our seal and kind of months our CFO.

Long Haul: Before we get started let me remind you of a couple of housekeeping items. You are currently placed on mute you will be invited to ask questions. After the presentations.

Long Haul: Please take a moment to read the disclaimer on your screen.

Long Haul: Thank you with that lets now move into the prepared remarks from long haul and I don't know.

Laurent Freixe: Many thanks, Christophe, and good morning to all. Let me start with 4 key messages regarding 2024 and our outlook. First, we delivered 2024 results in line with or slightly better than our latest guidance provided in October, both on top line and on profitability, and cash flow was strong. Second, we have given formal 2025 guidance this morning. This is unchanged versus the previous outlook comments we provided despite the recent commodity price moves. Third, we are stepping up investment to accelerate category growth and improve market share performance. This is funded by our CHF 2.5 billion cost savings program called Fuel for Growth. We'll provide some more details on progress today. Finally, we have moved quickly to put the organization in place and align our teams to deliver our plan.

Operator: Many thanks, Christophe, and good morning to all. Let me start with 4 key messages regarding 2024 and our outlook. First, we delivered 2024 results in line with or slightly better than our latest guidance provided in October, both on top line and on profitability, and cash flow was strong. Second, we have given formal 2025 guidance this morning. This is unchanged versus the previous outlook comments we provided despite the recent commodity price moves. Third, we are stepping up investment to accelerate category growth and improve market share performance. This is funded by our CHF 2.5 billion cost savings program called Fuel for Growth. We'll provide some more details on progress today. Finally, we have moved quickly to put the organization in place and align our teams to deliver our plan.

Long Haul: Many thanks, Christoph and good morning to all.

Speaker Change: Let me start with four key messages regarding 2024 and our outlook.

Speaker Change: First we delivered the 'twenty 'twenty four results in line with or slightly better than our latest guidance provided in October.

Speaker Change: Both from top line and on profitability and cash flow were strong.

Speaker Change: Second we have given formal 2025 guidance. This morning. This is unchanged versus the previous outlook comments, we provided despite the recent commodity price moves.

So the we are stepping up investment to accelerate category growth and improve market share performance.

Speaker Change: This is funded by a $2 5 billion Swiss franc cost savings program called shoot for growth.

Speaker Change: We'll provide some more details on progress to date.

Speaker Change: And finally, we have moved quickly.

Speaker Change: To put the organization in place and aligned our teams to deliver our plan.

Laurent Freixe: We had a solid finish to 2024, and this gives us a good base as we move into 2025. It is important to keep in mind that we are on a journey and that it will take time until we are firing on all cylinders. Things are changing and changing fast. At the CMD, we set out how we plan to accelerate performance and transformation by driving operational excellence, unlocking the full portfolio potential, and strengthening our foundations. With this reminder, let's look at what we have been doing to accelerate Nestlé. We started with sharpening the strategy, building on our nutrition, health, and wellness foundations, and we put in place the organization to set us up for delivery.

Speaker Change: We had a solid finish to 2024 and this gives us a good base as we move into 2020 five.

Speaker Change: It is important to keep in mind that we are on a journey.

Speaker Change: And that it will take time until we are firing on all cylinders, but things are changing and changing fast.

At the same D. We set out how we plan to accelerate performance and transformation by driving operational excellence.

Speaker Change: Looking at the full portfolio potential and strengths in Ingalls foundations.

Speaker Change: With this reminder, let's look at what we have been doing to accelerate nicely.

Speaker Change: We started with sharpening the strategy building on our nutrition health and wellness foundations.

Laurent Freixe: We simplified the zone structure, moving from 5 zones to 3 zones, reorganized waters and premium beverages into a global standalone business, and digital and sustainability now report directly to me. From the outside, these changes may sound like simple changes to our reporting segments, but these changes are not at all trivial. Ultimately, they impact 270,000 people. We are not only changing the way we report, we are changing the way we work. It's impressive that we have executed this in a matter of a couple of months, and I want to thank our teams for this. With the plan and the organization in place, we need to make sure everyone is aligned behind the executions. In the last weeks, we have cascaded down the strategy across the organization. Through what we call our OMP, our operational master plan.

Speaker Change: And we put in place yoga musician set us up for delivery.

Speaker Change: We simplified the zone structure moving from five zones to three zones.

Speaker Change: Reorganized waters and premium beverages into a global Standalone business and digital and sustainability now report directly to me.

Speaker Change: From the outside these changes may sound like simple changes to our reporting segments.

Speaker Change: But these changes I'm not that old trivium ultimately they impact 270000 people.

And we are not only changing the way we report we are changing the way we work.

Speaker Change: It's impressive that we have executed this in a matter of a couple of months.

Speaker Change: And I want to thank our teams for this.

Speaker Change: With the plan and the organization in place we need to make sure everyone is aligned behind the executions.

In the last weeks, we have guests get it down the strategy across the organization through what we call <unk> or M. P O operational Master plan.

Speaker Change: It sets out in detail the actions and to keep your eyes behind your objectives with clear targets had known as against each.

Speaker Change: And we have started to track progress through monthly operational reviews.

Speaker Change: We use the theater circuit internally as our strategic framework.

Speaker Change: This picture I noted with the OMB actions is something you will find on initially desks around the world.

Speaker Change: There is a lot that sits behind this.

Speaker Change: It starts with efficiency and productivity because they see the fuel for the growth engine.

Speaker Change: Next is investing for growth with appropriate impact so that we deliver growth with the right returns.

Speaker Change: It is important to reiterate here that we are not waiting until we have all the additional shoot from efficiencies before we start to invest.

Speaker Change: And this all leads to creating shared value, making sure we deliver profitable growth in the long term sustainable way.

Laurent Freixe: I'm now going to talk to what we have been doing and what we will be doing in these three areas. At the CMD, we announced a new three-year cost reduction program which comes on top of existing annual cost efficiency initiatives. We call this new program Fuel for Growth. We aim to achieve a cost savings of CHF 2.5 billion by the end of 2027. Approximately three quarters of the savings will come from procurement, with the remainder coming from operational efficiencies and commercial investments. The savings will build from CHF 0.7 billion in 2025 to reach the full run rate savings of CHF 2.5 billion by the end of 2027. Over CHF 300 million of the expected savings for 2025 have already been secured. That is how we are creating the fuel.

Speaker Change: I know going to talk to what we have been doing and what we will be doing in these three areas.

Speaker Change: And the C and D. We announced a new three year cost reduction program, which comes on top of existing annual cost efficiency initiatives.

Speaker Change: We call this new program fuel for growth.

Speaker Change: We aim to achieve a cost savings of 2.5 billion Swiss francs by the end of 2027.

Speaker Change: Approximately three quarters of the savings will come from procurement with the remainder coming from operational efficiencies and commercial investments.

Speaker Change: The savings will build from 0.7 billion Swiss francs in 2025 to reach the full run rate savings of $2 5 billion by the end of 'twenty 'twenty seven.

Speaker Change: Oh, the 300 million of the expected savings for 2025 have.

Speaker Change: Already been secured.

Laurent Freixe: Now let's look at how we will deploy it to accelerate growth. Our midterm ambition is to deliver 4%+ growth. To do that, we need to accelerate the category growth and improve on top our market share. We have four main levers: expand our winners to reach their full potential, achieve more impact for innovation by scaling our big bets, build new growth engine, and last but not least, address our underperformance. I will dig into how we are progressing on these levers in some of our largest categories. Let's start with coffee. In ready-to-drink coffee, annual sales today are around CHF 1 billion with double-digit growth. Last year, we launched in new markets in AOA, and we are doing the same in Europe and Latin America this year. The new launches are off to a strong start.

Speaker Change: Yeah.

Speaker Change: That is how we are creating the fuel no let's look at how we will deploy it to accelerate growth.

Speaker Change: Our mid term ambition is to deliver 4% plus growth.

Speaker Change: To do that we need to accelerate the calorie grows and improve on top or market share.

Speaker Change: We have four main levers.

Speaker Change: Expand our awareness to reach their full potential.

Speaker Change: She more impactful innovation by scaling our big bets.

Speaker Change: Build new growth engines.

Speaker Change: And last but not least address all underperformance.

Speaker Change: I will dig into how we are progressing on these leave us in some of our largest categories.

Speaker Change: Let's start with coffee.

Speaker Change: In ready to drink coffee annual says to the around 1 billion with double digit growth.

Speaker Change: Last year, we launched in new markets. He may work.

Speaker Change: We're doing the same in Europe, and Latin America this year.

Speaker Change: The new launches are off to a strong start.

Speaker Change: It was in the Middle East recently, and I was very impressed.

Speaker Change: Outstanding in store execution.

Speaker Change: Next to our T D coffee outperformed represents annual sales of about 2.5 billion Swiss francs.

Speaker Change: An objective to grow at 10% plus annually.

Speaker Change: We are leveraging all three of our unrivaled brands in Mexico for Starbucks and this crystal.

Speaker Change: And innovation is key to winning new accounts and we are launching new machines, we've announced capabilities.

Speaker Change: For example, we have launched the next cafe fusion range in 15 markets across Asia, Europe, and Latin America, and it is now being rolled out to an additional 60 markets.

Speaker Change: Okay.

Speaker Change: In coffee, we have two Univision big bets.

Speaker Change: The first and this gets at is pursue concentrates was launched in 2024 in Australia, and China and resonated strongly.

Speaker Change: In 2025, we are now expanding into seven new markets, including the U S and the UK.

Laurent Freixe: The second, Nescafé Dolce Gusto Neo, is rolling out to 6 new markets in 2025, and we are launching new machines in existing markets. On underperformance, we have said before that we need to revitalize Nespresso in Europe by increasing availability and visibility. We are expanding our pop-ups and shop-in-shop model, and we are also investing significantly in a new global George Clooney campaign. Turning next to pet care, the category organic growth slowed in 2024, but we continue to expect 4 to 5% in the medium term. For Nestlé, we see a lot of opportunities. In Zone AOA, for instance, we can have a much larger market share than we have today. We are making a substantial investment in capabilities, particularly in market innovation and marketing. Growth accelerated to double digits in the second half of 2024, and we are growing market share.

The second the scaffold the triggers for meal. He is rolling out to six new markets in 2025.

Speaker Change: And we are launching new machines in existing markets.

Speaker Change: On the performance, we have said before that we need to revitalize this breakthrough in Europe by increasing availability and visibility.

Speaker Change: We are expanding our purpose and shop in shop model and we are also investing significantly in our new global draw scrutiny campaign.

Speaker Change: Turning next to pet care.

Speaker Change: The category growth slowed in 'twenty 'twenty, four, but we continue to expect 4% to 5% in the medium term.

Speaker Change: Fortunately, we see a lot of opportunities.

Speaker Change: In Zuni way for instance, we can have a much larger market share than we have today.

Speaker Change: We are making a substantial investment in capabilities, particularly in marketing innovation and marketing.

Laurent Freixe: Therapeutics is already a business of over 600 million CHF and growing strongly. To drive that further, we are expanding investment in science-based innovation and veterinary engagement and scaling up in direct-to-consumer. On innovation big bets, we announced the expansion plans for our unique pyramid-shaped wet cat food earlier this week. We are expanding across the US and launching a new product form in 15 markets in Europe, with more to come in 2026. Nutrition, health, and wellness is a key component of our Nestlé strategy. Our infant nutrition business continues to build on science-based innovation.

Speaker Change: Gross accelerated to double digits in the second half of 'twenty 'twenty, four and we are growing market share.

Speaker Change: There are predicts he's already a business or for the 600 million Swiss francs and growing strongly.

Speaker Change: To drive that further we are expanding investment in science based innovation and veteran engagement and scaling up in direct to consumer.

Speaker Change: On the innovation Big bets, we announced expansion plans for our unique pyramid shaped what get food earlier this week.

Speaker Change: We are expanding across the U S and launching a new product for in 15 markets in Europe with multiple come in 2026.

Speaker Change: Nutrition health and wellness is a key component of all this the strategy.

Speaker Change: Infant nutrition business continues to build on science based innovation.

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