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16/02/2023

Despite Price Hikes, Nestle's Profit Forecast For The Full-Year Falls Short Of Expectations




Despite Price Hikes, Nestle's Profit Forecast For The Full-Year Falls Short Of Expectations
Despite passing on higher raw material costs to customers by raising prices, Nestle reported a weaker-than-expected full year net profit.
 
The producer of Nescafe instant coffee and KitKat chocolate bars reported a decrease in net profit attributable to shareholders to 9.3 billion Swiss francs ($10.08 billion), missing analyst consensus expectations of 11.6 billion francs.
 
The company's net profit decreased from 16.9 billion francs a year earlier, when it made a significant profit from selling a portion of its stake in L'Oreal, and as margins dipped slightly over the course of the year.
 
Despite price increases throughout the year, sales rose to 94.4 billion francs, falling short of expectations for 95.02 billion francs.
 
In order to offset the rising costs of everything from cocoa and sunflower oil to wheat, the packaged goods industry has raised prices.
 
When Russia invaded Ukraine, the industry was already dealing with COVID-era supply chain problems and raw material costs. This further increased the cost of energy and other commodities.
 
Nestle reported that its organic growth, which excludes the effects of acquisitions and exchange rate fluctuations, came in at 8.3%, which was lower than the 8.6% anticipated. Nestle set an annual organic growth goal of 8%.
 
With an 8.2% increase, pricing was by far the largest contributor to organic growth. Volumes, however, only saw a 0.1% year-over-year increase.
 
CEO Mark Schneider recognized the challenging environment for consumers.
 
"Last year brought many challenges and tough choices for families, communities and businesses. Inflation surged to unprecedented levels, cost of living pressures intensified, and the effects of geopolitical tensions were felt around the world.
 
"Organic growth was solid, margins continued to be resilient, and our underlying earnings per share development was strong."
 
(Source:www.rte.ie)

Christopher J. Mitchell

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