Nestlé has confirmed its margin and sales growth targets for 2022, after strong price increases to cushion cost inflation helped organic sales rise more than expected in the first quarter.
Russia's invasion of Ukraine has forced consumer goods companies to rethink their strategy in Russia, while accelerating inflation is threatening their profitability. But so far, both challenges have not left a significant mark on the performance of the world's biggest food group.
'Cost inflation continues to increase sharply, which will require further pricing and mitigating actions over the course of the year,' the company said in a statement.
Organic Sales Expectations
The group, based in Vevey on Lake Geneva, confirmed that it expects organic sales to rise by around 5% this year, with a trading operating profit margin between 17% and 17.5%.
Peer Danone kept its financial goals unchanged on Wednesday after like-for-like sales rose 7.1% in the first quarter and beat expectations.
At Nestlé, organic sales, which strip out currency swings, acquisitions and divestments, were up 7.6%, more than a 5.0% average forecast in a company-compiled consensus, helped by price increases of 5.2%.
'Challenging Environment'
"Amid this challenging environment, we delivered strong organic sales growth with resilient RIG," chief executive Mark Schneider said in a statement. "We stepped up pricing in a responsible manner and saw sustained consumer demand.
"The Nestlé team addressed these headwinds and advanced our long-term strategy and sustainability objectives with agility and determination. We confirm our guidance for the year."
Schneider also referenced the ongoing conflict in Ukraine, which he said has "caused unspeakable human suffering", and pledged to do more to support the company's operations in the country.
"We remain focused on supporting our colleagues there and providing humanitarian relief, while standing with the international community in the call for peace," he said.
The group said in March that it was halting all non-essential sales in Russia, however employees have called on the group to do more.
News by Reuters, edited by ESM – your source for the latest A-Brands news. Click subscribe to sign up to ESM: European Supermarket Magazine.
