Nestlé has reported weaker than expected full year net profit, despite the world's biggest food group passing on higher raw material costs by hiking prices for customers.
The maker of the KitKat chocolate bar and Nescafé instant coffee said its net profit attributable to shareholders fell to CHF 9.3 billion (€9.42 billion), missing forecasts for CHF 11.6 billion (€11.75 billion) in a company gathered consensus of analysts.
Net profit fell from CHF 16.9 billion (€17.11 billion) a year earlier when the Swiss company made a big gain from selling part of its stake in L'Oréal and as margins dipped slightly during the year.
Sales increased to CHF 94.4 billion (€95.6 billion), missing forecasts for CHF 95.02 billion (€96.22 billion), despite price increases introduced during the year.
The packaged goods industry has jacked up prices to cope with surging cost inflation of everything from cocoa and sunflower oil to wheat.
The industry had already been battling COVID-era supply chain issues and raw material expenses when Russia invaded Ukraine, further boosting prices of energy and other commodities.
Nestlé said its organic growth, which cuts out the impact of acquisitions and currency movements, came in at 8.3%, weaker than the 8.6% expected.
"Last year brought many challenges and tough choices for families, communities and businesses," commented CEO Mark Schneider. "Inflation surged to unprecedented levels, cost of living pressures intensified, and the effects of geopolitical tensions were felt around the world.
"Looking to 2023, we expect another year of robust organic growth, with a focus on restoring our gross margin, stepping up marketing investments and increasing free cash flow. Nestlé’s value creation model puts us in a strong position to achieve our 2025 targets and to generate reliable, sustainable shareholder returns."
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