Nestlé has missed its first-quarter organic sales growth estimates, as the world's biggest packaged food company hiked prices and sold fewer products, particularly in North America.
The maker of Maggi noodles, Nescafé coffee and KitKat chocolate wafer bars confirmed its 2024 guidance of organic sales growth of about 4% and a moderate increase in underlying trading profit margin.
Organic sales, which exclude the impact of currency movements and acquisitions, rose 1.4% in the first quarter ended March, the company said. Analysts had on average expected organic sales growth of 2.9%.
'Rebound In Second Quarter'
"We had expected a slow start and see a strong rebound in RIG (sales volumes) in the second quarter with reliable delivery for the remainder of the year," CEO Mark Schneider said in a statement.
The packaged goods industry has for more than two years hit shoppers with higher prices, citing higher input costs that started with the COVID-19 pandemic and were exacerbated by Russia's invasion of Ukraine.
The higher prices, however, have hurt sales volumes at big food and consumer products companies that have lost ground to cheaper brands.
Total reported sales decreased by 5.9% to CHF 22.1 billion (€22.57 billion).
'An Uninspiring Start'
"Uninspiring start to the year," Vontobel analyst Jean-Philippe Bertschy said. "The weak (volumes), although well flagged by the company in February, are unlikely to reassure investors who were expecting a sign of improvement given recent results from peers."
Executives have in recent quarters flagged that costs are rising at a slower pace, and have started easing up on hikes in tandem. In some cases, prices are still rising because companies argue they are innovating better product.
"In North America, we have stepped up our innovation intensity and commercial activities, primarily in frozen food, which lost ground in the first quarter," Schneider added.
