Nestlé confirms it will buy back CHF20 bn ($21.3 mn) of its shares between 2022 and 2024 as the company is set to hit its most profitable period since 2008.
The firm has already bought close to CHF9.7 bn of shares in 2022, aiming to maintain its practice of increasing its dividend year on year.
In the latest investor update, the food and drink processing giant reaffirms its bid to return to a pre-tax profit margin of between 17.5 percent and 18.5 percent by 2025 following the ‘margin impact of a sharp increase in cost inflation’ in 2021 and 2022.
The company says it also expects to deliver an annual underlying EPS growth range of 6 percent to 10 percent in constant currency between 2022 and 2025. It plans on targeting free cash flow of 12 percent of sales and return on invested capital of 15 percent by 2025.
Inflation boosts sales
In October, Nestlé reported strong sales increases during the first nine months of trading by 9.2 percent to CHF69.1 bn from CHF63.3 bn in 2021. Sales were boosted by a 7.5 percent increase in prices across popular brands such as KitKat and pet food Purina to combat inflation.
Mark Schneider, CEO at Nestlé, says in an investor update that the company has made ‘significant progress’ in recent years, accelerating organic growth, increasing margins and enhancing capital efficiency.
‘Creating shared value for stakeholders remains our focus, with ‘good for you, good for the planet’ at the heart of our strategy,’ Schneider says. ‘We will continue to invest for future growth, investing behind our brands, delivering impactful innovation, leveraging digitalization and improving speed and agility.’