Nestlé Posts 'Resilient' Nine-Month Sales Volumes Despite Price Hikes

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Nestlé Posts 'Resilient' Nine-Month Sales Volumes Despite Price Hikes
Credit: © Reuters.

By Scott Kanowsky -- Nestlé SA (SIX: NESN ) has reported positive nine-month sales volumes despite supply chain issues and ongoing product price rises in response to soaring inflation.

Real internal growth for the first three quarters of 2022 came in at 1%, down from 6% in the corresponding period last year. Vevey, Switzerland-based Nestlé, known for brands like Nescafé, KitKats, and Purina pet food, said it faced a high base of comparison and supply constraints.

The figure also excludes results from the Russia region, where the world's largest food company moved to halt much of its sales earlier this year following the outbreak of the war in Ukraine.

Pricing for its items rose by 7.5%, as the food company continued to pass the impact of "significant" input cost inflation on to customers. Nestlé said these increases have led to "limited demand elasticity," with consumers reconsidering purchases of some items. However, shoppers have largely absorbed the uptick in prices for basic supermarket products.

"The challenging economic environment is a concern for many people and is impacting their purchasing power," said Nestlé chief executive officer Mark Schneider in a statement.

But the price tag hikes gave a boost to like-for-like net sales, which jumped by 8.5%. Nestlé subsequently upgraded its annual outlook for the number to around 8% from its previous level of between 7%-8%. Several of Nestlé's biggest rivals, including Unilever (NYSE: UL ) and Kraft Heinz (NASDAQ: KHC ), have also upped their prices and increased their full-year sales forecasts in 2022.

The group's Purina unit was the largest contributor to nine-month organic growth, thanks to strong performance in science-based and premium brands like Purina ONE and Fancy Feast. Confectionery items, particularly KitKat and seasonal products, also posted double-digit growth.

Shares in Nestlé fell marginally in early European trading on Wednesday.


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