Nestle reported its weakest annual organic sales growth in more than two decades, hit by a pullback in consumer spending after years of high inflation. The Swiss maker of KitKat chocolate bars and Nescafe coffee said Thursday that organic sales grew 2.2% in 2024. The figure marks a sharp slowdown from the organic sales growth of 7.2% Nestle reported for 2023 and compares with analysts' expectations of 2.1%, according to consensus estimates provided by the company. Operating profit accounted for 17.2 per cent of sales, compared to 17.3 per cent in the previous year. The bottom line was a net profit of 10.9 billion Swiss francs, a good 1 per cent less than in the previous year. A ray of hope for shareholders, who have had to accept large share price losses in recent months: the dividend is to rise by 5 'Rappen' to 3.05 Swiss francs per share. Nestlé has thus maintained an annual dividend increase for 29 years. For 2025, management continues to forecast an improvement in organic sales growth compared to 2024. The underlying operating profit margin is expected to be 16.0 per cent or higher. In the medium term, Nestlé intends to return to values of over 17 per cent. Organic sales growth is expected to be 4 per cent plus in a normal business environment.

On Wednesday, the SMI gained 0.2 per cent to 12,714 points. Among the 20 SMI stocks, there were ten losers and nine gainers, with one share closing unchanged. 19.98 (previously: 17.06) million shares were traded. The US inflation data caused market interest rates to rise, which supported the banking sector in Europe. However, none of this benefited UBS, the share price fell against the European trend by 0.9 per cent. Morgan Stanley expressed a negative view on Novartis (-0.2%) and Lonza (-1.7%), while Roche (+1.2%) fared better in the sector study. Boosted by a positive commentary from Vontobel, SGS climbed a further 1.5 per cent. The goods testing group had impressed with its business figures the previous day. Nestlé gained 0.7 per cent ahead of its annual report on Thursday. Among the small caps, Schindler rose by 1.8 per cent. According to Baader, the lift and escalator provider was disappointed with sales in the fourth quarter but improved its earning power. The increased dividend was particularly well received by the market.

The European stock markets closed slightly higher on Wednesday, while yields eased on the bond market following better-than-expected inflation figures in the United States. The Stoxx Europe 600 index gained 0.1% to 547.8 points. In Paris, the CAC 40 and SBF 120 advanced by 0.2% and 0.1% respectively. In Frankfurt, the DAX 40 climbed 0.5%, while the FTSE 100 was appreciated by 0.3% in London. KLEPIERRE: the shopping centre operator announced on Wednesday that it expected its net current cash flow per share to rise again in 2025, after exceeding its forecasts for this profitability indicator last year. In 2024, the current net cash flow came to €2.60 per share, compared with €2.48 per share a year earlier, an increase of 5.3%. REXEL: the electrical equipment distributor reported lower earnings in 2024 and said it expected sales to be stable or up slightly in 2025, on a constant-day basis. MERCIALYS: the shopping centre operator announced on Wednesday that it was aiming for further growth this year, after exceeding its targets in 2024. ESSILORLUXOTTICA: the eyewear and corrective lenses manufacturer reported better-than-expected fourth-quarter sales on Wednesday, marked by accelerating growth in most regions. MICHELIN: the tyre manufacturer indicated that it expected ‘slight growth’ in its markets in 2025, after recording a 4.1% fall in sales in 2024. The group's operating profit fell by 5.2% last year to €3.38 billion, but free cash flow came in well above expectations at €2.23 billion.

U.S. stocks fell Wednesday after the first inflation readout for 2025 stoked investors’ concerns about stubborn price pressures and reignited worries that interest rates might not come down as expected. The Dow Jones Industrial Average declined 0.5%, or about 225 points. The S&P 500 fell 0.3%. The tech-heavy Nasdaq Composite edged higher by less than 0.1%. The consumer-price index rose 3% in January from a year earlier, an acceleration from December’s rate, and faster than economists had expected. The WSJ Dollar Index and Treasury yields rose after the CPI figures were released, while stocks turned lower. January CPI often reflects big price adjustments made by businesses to kick off the year. So today’s report marks an important test of the Federal Reserve’s progress in its fight to tame inflation. The Fed held rates steady at its meeting last month after cutting interest rates by a full percentage point in 2024. Fed Chair Jerome Powell, meanwhile, delivered a second day of testimony on Capitol Hill. He told senators that Wednesday’s inflation report offers the latest reminder that the central bank has made “great progress” toward bringing inflation closer to its goal but, “we’re not quite there yet.” On Tuesday, he said the Fed doesn’t need to rush to cut rates since the economy is doing well. Bitcoin traded around $97,000. CVS Health shares surged 15% after the healthcare company reported earnings that beat Wall Street’s expectations and projected improved results in 2025. ALIBABA (+4.6% for the ADR): the Chinese e-commerce giant is making progress with its project to deploy artificial intelligence tools with APPLE (+0.1%), according to the Wall Street Journal. RESTAURANTS BRANDS (-1.7%): the restaurant group, which owns the Burger King chain, beat expectations in the last quarter thanks to growth in international sales. GILEAD SCIENCES (+7.5%): the pharmaceuticals group reported better-than-expected results for the last quarter and expects a sharp increase in profits this year thanks to the launch of new treatments, particularly for HIV.

Stock markets in East Asia are on an upward trend on Thursday. While Tokyo (+1.4% to 39,512 points), Seoul (+1.0%) and Hong Kong (+2.3%) recorded a strong performance, the leading index in Shanghai held up well. In Hong Kong, the latest government support measures for the struggling property group China Vanke continue to inspire confidence and a buying mood. The day's favorites in Hong Kong are technology stocks, whose sub-index shot up by 3 per cent. Here, the AI technology developed by Deepseek continues to fuel the buying mood. Alibaba, for example, gained a further 5.2 per cent, Baidu over 9 per cent. In Seoul, the share price of excavator manufacturer HD Hyundai Construction Equipment shot up by 18 per cent. This is due to speculation that Ukraine will be rebuilt if a ceasefire is actually reached there. Shares in construction equipment manufacturers are also being bought in Tokyo. Komatsu increased in price by 3.0 per cent, Kawasaki Heavy by 3.2 per cent. Softbank Group, on the other hand, lost almost 4 per cent. The company disappointed in after-hours trading on Wednesday with a net loss in the third quarter.

U.S. government debt aggressively sold off on Wednesday, pushing the benchmark 10-year yield up for a fifth straight session, after the consumer-price index for January came in higher than expected and raised doubts about the Federal Reserve’s ability to keep cutting interest rates. The 10-year Treasury note yield jumped by 10 basis points (0.10 percentage points) to 4.63%. The 2-year Treasury note yield climbed by 7 basis points to 4.36%.

Target price Lonza: Stifel raises to CHF 640 (625) - Buy
Target price SGS: Kepler Cheuvreux upgrades to CHF 102 (98) - Hold
Target price Swissquote: UBS lifts to CHF 425 (375) - Neutral

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