Business Express is an online portal that covers the latest developments in the world of business and finance. From startups and entrepreneurship to mergers and acquisitions, Business Express provides reporting on the stories that matter most to business leaders and decision-makers.The website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website.
2023 10 19T051830Z 1 LYNXMPEJ9I05Y RTROPTP 4 NESTLE RESULTS - Business Express

Nestle misses nine-month sales estimates, expects volume upturn by year-end

Nestle misses nine-month sales estimates, expects volume upturn by year-end

By Richa Naidu

LONDON (Reuters) -Nestle posted lower-than-expected nine-month sales growth on Thursday as higher product prices made shoppers balk, but said it expects volumes to turn positive again by the end of the year.

The packaged goods industry has for over two years hit shoppers with higher prices, citing higher input costs that started with the COVID-19 pandemic and were exacerbated by Russia’s invasion of Ukraine. Everything from sunflower oil to freight has become more expensive, taking a toll on global supply chains.

Nestle’s 8.4% price increase was below the average analyst estimate of 8.6%. Real internal growth (RIG) – or a measure of sales volumes – fell 0.6%, meeting expectations. In the third quarter, RIG improved to a decline of 0.3%, Nestle said.

The company’s CEO, Mark Schneider, said he had “confidence that real internal growth, the sum of volume and mix, will turn positive in the second half of the year and again become the main driver of growth going forward.”

“Pricing will be more targeted, by brand and by country,” Schneider said.

“Key sales indicators are going in the right direction,” Vontobel analyst Jean-Philippe Bertschy said. “We expect volume growth to accelerate and gross margins to improve in the coming quarters.”

Investors and analysts have raised concerns that companies are pushing price rises too far and recommended that they focus more on marketing and innovation, amid a cost of living crisis that is seeing retailers’ private label brands stealing market share.

Organic sales, which exclude the impact of currency movement and acquisitions, rose 7.8% in the nine months ended September, the maker of Maggi stock cubes and Nescafe coffee said.

Don't miss out on any breaking news or insightful opinions!
Subscribe to our free newsletter and stay updated on the go!

By submitting this form, you are consenting to receive marketing emails from: Global Banking & Finance Review. You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email.

Analysts had on average expected organic sales growth of 8.1%.

Executives have in recent quarters flagged that costs are rising at a slower pace, but also warned that shoppers would continue to pay more for products like soap, toilet paper and coffee because companies still have not recouped years of damage from higher expenses.

Nestle confirmed its full-year outlook of organic sales growth between 7% and 8% and underlying trading operating profit margin between 17.0% and 17.5%.

A Nestle spokesperson said the firm had “not seen any impact from (weight loss drugs) on our sales”, referring to the potential threat posed to the packaged food industry by Novo Nordisk’s blockbuster weight-loss drug Wegovy.

The drug’s popularity has prompted concerns in the consumer and retail industry over whether food sales will be impacted. Nestle shares fell this month after Walmart, the world’s biggest retailer, said that it saw a slight pullback in food consumption with people taking appetite-suppressing drugs like Wegovy.

($1 = 0.8989 Swiss francs)

(Reporting by Richa Naidu; Editing by Christopher Cushing)


Recent Post: