Nestle beats first-half organic sales expectations
NESTLE improved its full-year organic sales outlook and reported better-than-expected first-half organic sales, as the world’s biggest packaged food company again raised prices to cope with higher input costs.
Nestle said it is narrowing its full-year organic sales growth guidance to a range of 7 per cent to 8 per cent, from a range of 6 per cent to 8 per cent.
The Swiss company, which makes Kit Kat chocolate wafer bars and Nescafe coffee, said organic sales during the period rose 8.7 per cent, beating average estimate of 8.1 per cent growth, according to a company-provided analyst consensus.
Nestle’s 9.5 per cent price increases were ahead of the average analyst estimate of 8.7 per cent. Real internal growth – or sales volumes – fell 0.8 per cent versus expectations of a 0.6 per cent decline.
“For the remainder of the year, we are confident that we will deliver a positive combination of volume and mix, an improvement in gross margin and a significant increase in marketing investments,” CEO Mark Schneider said.
The consumer goods company is one of many – from Unilever to P&G – that have in the past two years struggled to manage high costs of everything from sunflower oil to packaging. Their problems began with the Covid-19 pandemic and unusual weather patterns hurting agricultural commodities, and have worsened since Russia’s invasion of Ukraine.
By comparison, earlier this week consumer industry rivals reported mixed volume results. Reckitt reported sales volumes for the second quarter were down 4.3 per cent, Unilever’s quarterly volumes were down 0.3 per cent, and Danone’s second-quarter volume/mix declined 2.3 per cent.
Analysts and investors have repeatedly expressed concerns that hefty increases in selling prices over the past two years will alienate consumers and push them towards cheaper private label brands. REUTERS
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