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In a challenging economic climate, Swiss multinational food and beverage corporation Nestlé has reported a decrease in profits and share price, with its share price slumping by nearly a quarter last year. Despite these setbacks, the company remains committed to growing its business in the face of adversity, particularly in China.
Nestlé's extensive portfolio includes well-known brands such as Nespresso coffee capsules, KitKat chocolate bars, Purina dog food, Maggi bouillon cubes, Gerber baby food, and Nesquik chocolate-flavoured drinks. However, the company is currently grappling with several issues in China that are impacting its overall growth.
The primary challenges include weak market conditions, a sales decline, and global economic uncertainties. Nestlé's sales in Greater China have declined, negatively affecting the company's organic growth and real internal growth (RIG) in the second quarter of 2025. The company is cautious about macroeconomic risks and uncertainties, which could further impact its performance in China.
To address these challenges, Nestlé is taking several strategic steps. The company plans to strengthen its presence in Greater China through strategic investments, focusing on key growth areas and enhancing its market share. Nestlé is also working on transforming its underperforming business cells, with 18 key areas identified for improvement. This includes addressing the growth gap to market, which has improved by a third.
Nestlé has increased its marketing investment, with advertising and marketing expenses as a percentage of sales rising to 8.6% in the first half of 2025. This is part of its strategy to enhance brand visibility and improve market position. The company is also focusing on product superiority and innovation, with six key innovation bets showing promising sales figures.
Despite these challenges, Nestlé remains optimistic about its future growth in China. The company reported better organic growth in the second quarter compared to the same period last year, and aims for an underlying trading operating profit margin of at least 16% this year, compared to 17.2% in 2024.
In the first half of the year, Nestlé's sales decreased by 1.8% to 44.2 billion francs, and net profits dropped by 10.3% to 5.1 billion Swiss francs (RM27 billion). However, net profit came in slightly higher than expected, and the company expects this better growth to continue for the rest of the year.
Nestlé launched measures to boost its product offering and cut costs, and the company's performance in China has been affected by sluggish domestic consumption amid a deflationary price environment. Despite these challenges, Nestlé is maintaining its 2025 guidance, despite increased headwinds.
In a statement, Nestlé's chief executive, Laurent Freixe, stated that they are taking decisive measures to strengthen their business in Greater China. Despite a 3.5% fall in Nestlé's shares in a flat Swiss market, missing the analyst consensus, the company remains committed to its growth strategy in China and worldwide.
- The decrease in Nestlé's profits and share price is a matter of business news, with the share price slumping by nearly a quarter last year, largely due to challenges in the environment, such as weak market conditions and global economic uncertainties.
- Nestlé's strategy to overcome these setbacks and grow its business, particularly in China, involves several steps in personal-finance and technology areas, such as strengthening its presence through strategic investments, enhancing product superiority, and increasing marketing investments.
- The company's focus on innovation has resulted in six key projects showing promising sales figures, demonstrating a commitment to finance and investing in the growth of their business.
- Despite the ongoing challenges in China and a slight drop in Nestlé's share price, the company remains optimistic about future growth, aiming for an underlying trading operating profit margin of at least 16% this year, as reported in thefinance sector news.
