Nestlé has raised its full-year organic growth expectations to between 5% and 6% this year, after organic sales at the food giant grew by a better-than-expected 8.1% in the first half.
Food groups are grappling with surging commodity costs that are hitting margins, but Nestlé, with well-known brands like Nescafé coffee or Purina pet food, may be better placed than others to offset them through price increases and efficiency gains.
Organic sales growth at Nestlé accelerated to 8.1%, from 2.6% in the year-ago period, the world's biggest food group said in a statement. This was ahead of an estimate for 7.4% growth in a company-compiled consensus.
'Robust Momentum' In Retail Sales
"Organic growth was strong across most geographies and categories, with robust momentum in retail sales and a return to growth in out-of-home channels," commented Mark Schneider, chief executive. "Through fast-paced innovation, strong brand support, increased digitalisation and stringent portfolio management we have built the foundation for delivering consistent mid single-digit organic growth for years to come."
Growth accelerated to 8.6% in the second quarter, up from 7.7% in the first three months of the year.
Net profit rose slightly to CHF 5.9 billion Swiss, also ahead of a CHF 5.84 billion estimate in the consensus.
The company raised its full-year guidance for organic sales growth to 5-6%, after previously aiming for growth in excess of the 3.6% achieved last year. It is targeting an underlying trading operating profit margin around 17.5% this year.
Looking ahead, Schneider added that the business "continues to invest for future profitable growth. We are creating a global leader in vitamins, minerals and supplements with the acquisition of The Bountiful Company's core brands.
"The expansion of our partnership with Starbucks into ready-to-drink coffee will open new opportunities in a fast-growing segment. Our portfolio choices, strong execution and decisive actions on sustainability enable us to create value for all stakeholders."