Nestle(US:NSRGY) 3 6 Ke·2025-10-17 00:48Core Insights - Nestlé's transformation strategy is showing early signs of success, with a focus on internal growth rates driving performance [1][2] - The company reported total sales of 65.9 billion Swiss francs for the first nine months of 2025, a slight decline of 1.9% year-on-year, but an organic growth rate of 3.3%, up from 2.0% in the same period of 2024 [1][2] - The third quarter saw an organic growth rate rise to 4.3%, indicating strong internal growth resilience despite currency fluctuations impacting sales [1][2] Financial Performance - The organic growth of 3.3% in the first three quarters included a 100 basis point contribution from high-growth investments and efficiency improvements [2] - Breakdown of the organic growth rate shows a pricing contribution of 2.8% and an internal growth rate of 0.6%, reflecting a trend in the global consumer goods industry where price increases are the main driver, but sales volumes are beginning to recover [2][4] - The third quarter's performance was particularly strong, with organic growth rising from 2.9% in the first half to 4.3%, and the internal growth rate rebounding to 1.5% [3][4] Regional Performance - All regions contributed positively to organic growth, with Europe showing the strongest performance at a sales growth of 2.6% and an organic growth rate of 4.3% [8][9] - Emerging markets outperformed developed markets, with an organic growth rate of 5.2%, driven primarily by pricing strategies [8][9] Strategic Initiatives - Nestlé has increased its cost-saving target from 2.5 billion to 3 billion Swiss francs, aiming to achieve this by the end of 2027 through optimizing 16,000 positions [7] - The company is focusing on high-potential areas and has launched six major innovation projects in functional foods and smart packaging [7][10] - E-commerce channels showed a robust organic growth rate of 13.2%, indicating successful digital transformation efforts [6][10] Market Outlook - Nestlé maintains its outlook for 2025, expecting organic sales growth to improve compared to 2024, with a basic trading operating profit margin reaching or exceeding 16% [9][10] - The company aims for a free cash flow target exceeding 8 billion Swiss francs by 2025, with growth rates expected to surpass dividend growth from 2026 onwards [10] Stock Market Reaction - Following better-than-expected performance and confidence in the new CEO's organizational changes, Nestlé's stock price surged by 8.2% on October 16, marking the largest single-day increase since 2008 [11]