Nestlé has announced lower-than-anticipated full-year sales, attributing the downturn to ongoing pressures on household finances, according to the world’s largest food company.
In its report released on Thursday, the Swiss multinational disclosed a 7.2% increase in organic sales for the previous year, falling short of the 7.4% projection by analysts.
In response to mounting internal expenses, Nestlé has implemented price adjustments over the course of the past twelve months.
However, the rate of these adjustments moderated during the latter half of the year.
According to a Financial Times report, prices experienced a 7.5% year-on-year increase in the second half, in line with expectations but down from the 9.5% surge observed in the first half.
- Top of Form
- “Unprecedented inflation over the past two years has increased pressure on many consumers and impacted demand for food and beverage products,” said Nestlé chief executive Mark Schneider.
The Kit Kat maker also forecast lower organic sales growth of about 4% in 2024, below analysts’ estimates of 4.9%. The group also said it expected a “moderate increase” in its profit margin.
The company said margins for the full year were 17.3%, just shy of 17.4% expected by analysts.
Analyst Bruno Monteyne said the food giant had ended the year on a “disappointing note” and that the misses on volume and margin were “not the kind of reassuring Nestlé results investors are used to”.
Consumer goods companies have struggled to maintain sales, instead relying on ever higher prices to boost revenues. In Europe, Nestlé’s volumes fell 2.4% last year, while prices rose 10.6%.
What you should know
Nairametrics reported that Nestle Nigeria Plc recorded a profit before tax of N12.46 billion in Q3 2023, a year-on-year decline of 14.92% from the corresponding quarter in 2022.
The group recorded a revenue of N134.82 billion during the quarter, thus modifying the group’s nine-month earnings to N396.59 billion, representing a year-on-year increase of 18.93% from the corresponding period in 2022.
According to the company’s financial statements, the fast-moving consumer goods firm is currently facing currency risk from sales, purchases, and borrowings made in currencies other than its main currency, the Naira.
The company faces a net currency risk exposure of $439.98 million, €30.43 million, and CHF 3.35 million, among others.
For the nine months up to September 30, 2023, the company’s pre-tax profit plummeted by 197% year-on-year, showing a pre-tax loss of N56.66 billion in contrast to the N58.39 billion pre-tax profit during the same period in 2022.
This loss was influenced by unrealized FX losses the company faced in Q2 2023.
