Nestle misses nine-month sales estimates, expects volume upturn by year-end
By Richa Naidu
LONDON (Reuters) -Nestle posted lower-than-expected nine-month sales growth on Thursday as higher product prices made shoppers balk, but said it expects volumes to turn positive again by the end of the year.
The packaged goods industry has for over 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. Everything from sunflower oil to freight has become more expensive, taking a toll on global supply chains.
Nestle's 8.4% price increase was below the average analyst estimate of 8.6%. Real internal growth (RIG) — or a measure of sales volumes — fell 0.6%, meeting expectations. In the third quarter, RIG improved to a decline of 0.3%, Nestle said.
The company's CEO, Mark Schneider, said he had «confidence that real internal growth, the sum of volume and mix, will turn positive in the second half of the year and again become the main driver of growth going forward.»
«Pricing will be more targeted, by brand and by country,» Schneider said.
«Key sales indicators are going in the right direction,» Vontobel analyst Jean-Philippe Bertschy said. «We expect volume growth to accelerate and gross margins to improve in the coming quarters.»
Investors and analysts have raised concerns that companies are pushing price rises too far and recommended that they focus more on marketing and innovation, amid a cost of living crisis that is seeing retailers' private label brands stealing market share.
Organic sales, which exclude the impact of currency movement and acquisitions, rose 7.8% in the nine months ended September, the maker of Maggi stock cubes and Nescafe coffee said.
Analysts had on average expected organic sales
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