VEVEY, SWITZERLAND — Nestle SA again trimmed its fiscal 2024 outlook as new global chief executive officer Laurent Freixe pointed to weaker consumer demand and inventory cutbacks in reporting nine-month sales results.

For the nine-month period, reported sales declined 2.4% to 67.15 billion Swiss francs ($77.5 billion) from 68.83 billion Swiss francs a year earlier, reflecting negative impacts of 4.1% from foreign exchange rates and 0.3% from net divestitures, Vevey, Switzerland-based Nestle said. Organic sales grew 2%, including real internal growth (RIG) of 0.5% and a 1.6% uptick in pricing, for the nine months and were up 1.9% for the third quarter.

The year-to-date performance compared with 2.1% organic sales growth, including 2.2% in the second quarter, and a 2.7% decrease in reported sales for the first half.

“In an environment characterized by softening consumer demand, we delivered steady organic sales growth with positive real internal growth,” Freixe said in remarks on nine-month results. “Consumer demand has been subdued across many of our regions. In the third quarter, we saw softening demand and actions to reduce customer inventory levels. Another key factor shaping our organic growth this year has been the normalization of pricing, following unprecedented increases over the prior two years.”

The coffee, pet care and confectionery categories were the main sales growth drivers for the nine-month period, said Freixe, who noted that the recovery of Nestle Health Science is “going to plan” as the business unit notched double-digit growth in the third quarter.

“While market shares for billionaire brands improved, overall market share for the total group was broadly in line with the first half,” he said. “More work needs to be done to drive improvement here, and this is going to be one of my key priorities going forward.”

In light of the year-to-date results, Nestle cut its full-year guidance for organic sales growth to about 2%, with underlying trading operating profit margin at around 17% and underlying earnings per share growth (constant currency) coming in flat.

“We have updated our full-year 2024 guidance to reflect current trading and revised expectations for Q4,” Freixe said.

When reporting first-half results in late July, Nestle had lowered its fiscal 2024 organic sales forecast to “at least 3%” from the prior estimate of “around 4%.” The company also had projected mid-single-digit growth in underlying EPS (constant currency), down from the previous forecast of a 6% to 10% increase, and reaffirmed a “moderate gain” in underlying trading operating profit margin.  

“We have delivered 2% organic growth in the first nine months, and we now expect full-year organic growth also to be around 2%,” said Anna Manz, chief financial officer at Nestle.

Nestle’s Zone North America business saw nine-month reported sales decrease 2.6% to 18.52 billion Swiss francs ($21.39 billion) from 19.03 billion Swiss francs a year ago. Organic sales dipped 0.3%, as pricing edged up 0.6% while RIG fell 0.9% but turned positive in the third quarter, supported by strong growth in e-commerce and specialty channels, Nestle said. Foreign exchange had a negative impact of 2.3%.

“In the third quarter, Zone North America continued to see soft consumer demand and negative pricing, particularly in pet care, frozen food and coffee creamers,” Manz said.

“As we flagged at the half-year results, RIG has been impacted by the phasing of customer inventory related to promotional campaigns,” she said. “This positively impacted the second quarter and negatively impacted the third quarter, by approximately 100 basis points. Adjusting for that phasing, third-quarter RIG is only slightly below the second quarter. Quarter on quarter, pet care slowed due to increased promotional intensity but, along with coffee, continued to drive growth in the zone. Both pet care and coffee delivered positive RIG and gained market share. On the other hand, our frozen food and coffee creamer businesses continue to be challenged by increased price competition and a value-seeking consumer.”

By product category, the North American business posted low-single-digit sales growth in the nine months for pet care and water, with the latter fueled by “sustained momentum” for S. Pellegrino and the launch of Maison Perrier, Nestle said. Beverage category growth was positive for the period, as momentum for Starbucks and Nescafe offset a sales decrease for Coffee Mate. Confectionery sales rose by mid-single digits, led by Toll House baking products, according to the company. Sales decreased for both frozen food and infant nutrition, with Nestle citing “intense competition” in the frozen segment, especially in pizza.