Nestlé's New CEO: A Fresh Start or a Guidance Cut?

The appointment of Laurent Freixe as Nestlé's new CEO has sparked speculation about the company's future financial guidance. Some investors are warning that Freixe may cut guidance in his fresh start, following months of weak sales volumes under his predecessor, Mark Schneider. This article explores the potential reasons behind a guidance cut and the implications for Nestlé's share price and long-term investor confidence.

Nestlé, the world's largest food company, has faced challenges in recent years, including soaring costs and changing consumer preferences. The packaged food industry has had to cope with increased expenses for ingredients, shipping, and packaging, as well as regulatory pressures to reduce sugar, salt, and fat content. These factors have contributed to Nestlé's weak sales volumes and the need for a fresh start under Freixe.

Under Schneider, Nestlé cut its financial guidance once this year, in February. The company expected 2024 organic sales growth around 4% and a moderate increase in the underlying trading operating profit margin. By July, Nestlé estimated organic sales growth "of at least 3%" and a mid-single-digit percentage rise in underlying earnings per share at constant currencies. This revision sent Nestlé's stock down by more than 5%.

Freixe's challenges include reviving innovation and marketing, winning back investor confidence in core brands, and addressing regulatory pressures. The packaged food industry has had to cope with soaring costs and changing consumer preferences, which have led to slower price increases and a focus on healthier products.

Nestlé's new CEO may cut guidance in his fresh start, as some investors warn, due to the company's weak sales volumes and the need to address regulatory pressures and changing consumer preferences. A guidance cut could have consequences for Nestlé's share price and long-term investor confidence. However, Freixe's focus on innovation, marketing, and brand management could help Nestlé improve its financial guidance and overall performance.

In conclusion, Nestlé's new CEO, Laurent Freixe, faces significant challenges in reviving innovation, marketing, and brand management. While some investors warn of a potential guidance cut, Freixe's focus on these areas could help Nestlé improve its financial performance and regain investor confidence. The company's ability to adapt to regulatory pressures and changing consumer preferences will be crucial in determining its future success.