Nestlé navigates tariffs with localized production as sales grow 2.2%

SWITZERLAND – Nestlé has reported resilience to tariffs, with CEO Laurent Freixe stating that the company’s localized production model shields it from significant trade restrictions. 

Speaking after the release of Nestlé’s 2024 financial results, Freixe said the company manufactures most of its products in the same regions where they are sold, reducing exposure to potential import taxes. 

“We are in a unique, privileged position which gives us resilience to significant movements,” he said. 

He emphasized that 90% of the company’s US sales come from products made within the country, a strategy also applied in China and Europe.

The US government’s stance on trade policies has prompted companies to assess their supply chains, with concerns over potential tariffs on imported materials. 

Nestlé’s Chief Financial Officer, Anna Manz, acknowledged that while the company has sourcing mechanisms in place, its 2025 financial projections do not factor in potential tariff impacts. 

“Tariff moves could change the inflation picture considerably,” she noted. 

Despite external economic pressures, Nestlé recorded organic net sales growth of 2.2% to SFr91.4bn (US$100.8bn), driven by strong performance in coffee, confectionery, and pet care, particularly in emerging markets and Europe. 

However, net profit declined by 2.9% to SFr10.9bn.

The company has launched a three-year cost-saving initiative, the Operational Master Plan, with a target of reducing expenses by SFr2.5bn by 2027. 

The strategy focuses largely on procurement efficiencies, leveraging AI, supplier management, and spend consolidation. 

Freixe described the company’s progress, stating, “We are on a journey. It will take time until we are firing on all cylinders.”

Nestlé’s pricing adjustments in 2024 saw price increases slow to 1.5% from 7.5% the previous year. 

Manz attributed this to a reduction in input cost inflation but cautioned that rising costs in cocoa and coffee could necessitate further pricing actions. 

In North America, pricing adjustments were minimal at 0.4%, reflecting a highly competitive market and operational challenges. 

 Manz acknowledged the difficulties, saying, “Growth was disappointing in North America.” The company cited supply constraints in coffee creamers and pressures in the frozen food category as contributing factors.

To strengthen its position in the frozen meals sector, Nestlé announced a US$150m investment in a US production facility in November. 

Analysts at investment bank Stifel described the company’s financial results as reassuring, highlighting that revenue growth gained momentum towards the end of the year and that Nestlé provided comprehensive details on its cost-saving initiatives.