Nestlé’s CEO has praised the food company‘s 8.1% organic growth over the first half of this year, despite needing to increase product prices.
Key drivers in growth by product category included Purina Petcare, water and infant nutrition, followed by confectionary with mid-single digit growth and coffee with low-single digit growth.
The Swiss conglomerate reported a 9.2% rise in sales of £39.2 billion, up from £36 billion in 2021.
However, Nestlé’s net profit margin decreased to 11.5% due to one-off items, higher impairments and taxes. In Europe alone, operating profit margins also decreased, caused by cost inflation which more than offset pricing, growth leverage and disciplined cost control.
As a result, Nestlé will be increasing its product pricing by up to 6.5%, as previously warned by the company’s chief executive, Mark Schneider in April.
In terms of a full year outlook for 2022, Nestlé expects to see organic sales growth of between 7% and 8% with the underlying trading operating profit margin expected to be around 17%.
Nestlé CEO, Mark Schneider, said: “In the first half of the year, we delivered strong organic growth and a significant increase in underlying earnings per share. Our local teams implemented price increases in a responsible manner.”
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Schneider also highlighted that the business had “limited the impact of unprecedented inflationary pressures and supply chain constraints” on its margin development through “disciplined cost control and operational efficiencies”.
At the same time, investment into capital expenditure, digitalisation and sustainability increased significantly as the business remained “focused on creating shared value over both the short and long term”.
Commenting on the price rises, Finance.co.uk editor in chief, Laura Rettie said: “Sadly this is just another in a long line of businesses that are being forced to hike their prices.
“Firms are making the difficult decision to choose between passing on the increase in expenses to their customers, making less profit or decreasing the quality or quantity of goods or services. This isn’t about greed for many businesses – it’s about survival.”
