Nestlé CEO Laurent Freixe asserted that the world’s largest food producer is “immune” to tariffs, attributing this resilience to the strategic placement of its manufacturing facilities.
US President Donald Trump has threatened tariffs on imports into the US. This development has prompted companies to reassess their tax exposure on exports and evaluate their supply chains.
While discussing the impact of potential tariffs on February 13, following Nestlé’s 2024 financial results announcement, Freixe emphasized that the company is actively monitoring the situation. He stated, “We are in a unique, privileged position which gives us resilience to significant movements. We produce where we sell. Almost everything we sell we make in that given geography – 90% of what we sell in the US is made in the US and so is immune to tariffs. It is the same in China and Europe.”
When asked about the risk stemming from tariffs imposed on raw materials, Nestlé CFO Anna Manz noted that the company has numerous mechanisms at the local level to adjust sourcing if necessary. However, she acknowledged that Nestlé’s guidance for this year, which aims to enhance organic net sales compared to 2024, “excludes the impact of tariffs.”
She further elaborated, “Tariff moves could change the inflation picture considerably.”
Earlier in prepared remarks, Freixe, who became CEO in September, characterized the company’s full-year 2024 performance as “solid” despite a “challenging macro-economic context and soft consumer environment.”
Organic net sales increased by 2.2% year-on-year, reaching SFr91.4bn ($100.8bn). This growth was primarily driven by coffee, confectionery, and pet care, along with robust performance in emerging markets and Europe. However, net profit declined by 2.9% to SFr10.9bn.
Nestlé reported a “real internal growth” of 0.8%, which excludes the impact of pricing from organic sales.
Furthermore, the company has initiated a three-year cost-saving strategy known as the Operational Master Plan, aimed at reducing costs by SFr2.5bn by the end of 2027.
Freixe remarked, “We are on a journey. It will take time until we are firing on all cylinders.”
Three-quarters of the total savings are expected to stem from procurement, driven predominantly by advancements in AI, supplier management, and spend consolidation.
Nestlé’s pricing reduced to 1.5% in 2024, a significant drop from 7.5% the previous year, which Manz attributed to “a reduction in input cost inflation.”
However, she indicated that the company would need to implement additional pricing changes due to “significant inflationary pressure in cocoa and coffee.”
In North America, pricing was limited to just 0.4%, reflecting a challenging operating environment and intense competition.
Manz commented, “Growth was disappointing in North America.” Freixe highlighted supply constraints in coffee creamers and the frozen category as contributing factors.
In November, Nestlé announced plans to invest $150m to enhance a production facility for frozen meals in the US.
Commenting on Nestlé’s overall performance, analysts at investment bank Stifel stated, “We believe [the] FY24 results were reassuring overall. The targets look more and more credible to us with top-line acceleration at the end of the year and comprehensive details on the cost-savings initiatives.”
