Nestlé Beats First-Half Organic Sales Expectations

By Reuters
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Nestlé Beats First-Half Organic Sales Expectations

Nestlé 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.

Nestlé said it is narrowing its full-year organic sales growth guidance to a range of 7% to 8% from a range of 6% t0 8%.

The Swiss company, which makes Kit Kat chocolate wafer bars and Nescafe coffee, said organic sales during the period rose 8.7%, beating average estimate 8.1% growth, according to a company-provided analyst consensus.

Nestlé's 9.5% price increases were ahead of the average analyst estimate of 8.7%. Real internal growth - or sales volumes - fell 0.8% versus expectations of a 0.6% decline.

'A Positive Combination'

"Based on the strong performance in the first half of the year we upgrade our organic sales growth outlook for 2023," commented Mark Scheinder, chief executive. "At-home consumption post-COVID has now normalised, removing a growth drag on some of our categories.


"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."

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.

Volume Sales

By comparison, earlier this week consumer industry rivals reported mixed volume results. Reckitt reported sales volumes for the second quarter were down 4.3%, Unilever's quarterly volumes were down 0.3%, and Danone's second-quarter volume/mix declined 2.3%.

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.

Read More: Nestlé, Danone Price Hikes May Put Them On France's Inflation Radar

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