Nestle SA downgraded its sales outlook for the year, saying the impact of pricing had eased off faster than expected.
Nestle now expects sales to grow at least 3%, lower than the roughly 4% it had previously targeted. The world’s biggest food company has struggled to win back market share after inflation pushed shoppers to cheaper brands.
Revenue rose 2.1% in the first half, compared with the 2.5% expected by analysts, the Swiss maker of Maggi stock cubes said Thursday.
Almost all of that growth came from higher pricing which sharply slowed in the second quarter. Nestle’s coffee business, boosted by the rising price of the commodity, was the highest contributor to organic growth, increasing in the mid-single digits.
A cost-of-living crisis has taken its toll on consumers who’ve traded down to supermarket brands, and consumer giants like Nestle have struggled to coax them back. Shares fell 11% over the last year.
Faced with lower growth, Nestle could face pressure to cut costs more aggressively and consider whether acquisitions or disposals are needed to drive profitability.
Chief Executive Officer Mark Schneider has turned to innovation — including a range devised for people taking GLP-1 weight-loss drugs — to convince investors that the company has room left to grow. Nestle will launch new products addressing consumer trends this year, he said Thursday.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
