Nestle raises organic growth outlook to 7-8%

Nestle has raised its full-year sales growth forecast to 7-8% and just slightly lowered its margin guidance after cost inflation hurt less than expected and price increases boosted organic sales growth in the first half of 2022.

Consumer goods firms are facing sky-rocketing input costs for raw materials, energy and transportation, and while many consumers so far seem to accept the ensuing price increases, delays in implementing them are squeezing companies’ margins.

Peers Reckitt Benckiser, Unilever and Danone raised their full-year revenue forecasts this week after steep price hikes helped them beat second-quarter sales expectations.

At Nestle, the world’s biggest food group, net profit hit by one-off items including higher impairments and taxes fell 11.7% to 5.2 billion Swiss francs, the maker of KitKat chocolate bars and Maggi soups said in a statement, missing an average 5.815 billion Swiss francs in a company-compiled consensus.

The underlying trading operating profit margin declined to 16.9% in the first half of 2022, from 17.4% in the year-ago period, slightly higher than the expected 16.7%.

In the second quarter, underlying or ‘organic’ sales growth accelerated to 8.7%, from 7.6% in the first three months of the year, thanks notably to price increases of 7.7%, Nestle said.

First-half organic growth reached 8.1%, beating a forecast for 7.4% in the poll.

The company based in Vevey on Lake Geneva said it now expects organic sales growth of 7-8%, versus around 5% previously, and an underlying trading operating profit margin of around 17.0%, versus previous guidance for a margin between 17.0% and 17.5% this year.