LONDON, Oct 17 (Reuters): Nestle is revamping senior leadership and its operating structure, the food giant said on Thursday, as it cut its full-year sales outlook following weaker than expected nine-month underlying sales growth.
The packaged food industry has in recent years struggled with soaring costs as everything from sunflower oil and shipping to packaging, grain and energy became more expensive during the pandemic and after Russia's full-scale invasion of Ukraine.
This year, as inflation has eased, many of Nestle's competitors have slowed price increases, hoping to woo back shoppers who turned to cheaper products.
The Swiss group, however, did not ease up as quickly and for years cut too deeply into marketing and innovation budgets, analysts said. CEO Mark Schneider was ousted in August following several quarters of weak sales volumes.
Nestle said it now expects 2024 organic sales growth to be around 2 per cent and an underlying trading operating profit (UTOP) margin of about 17 per cent. In July, it cut its organic sales growth forecast to at least 3 per cent and saw a moderate increase in its UTOP margin from 2023's 17.3 per cent.
"A very painful reset for Nestle, unprecedented in recent history," Vontobel analyst Jean-Philippe Bertschy said. "It is hard to understand how the company could have expected sales growth of around 4 per cent until July."
"For a super-tanker like Nestle, the miss in just a few months is enormous."
New CEO Laurent Freixe said he planned to reduce the size of Nestle's executive board, merge the company's Latin America and North America units, and merge its Greater China and Asia, Oceania and Africa businesses, among other changes.
The company last embarked on a restructuring in January 2022, when it was organised into five geographic regions.
