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Nestlé raises its guidance following coffee drinkers boosted the first half

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  • H1 organic growth 8.1%, outperforming the survey
  • Organic growth for the second quarter 8.6%
  • First half sales 41.8 months Swiss francs, net gain 5.9 months Swiss francs
  • Fiscal year guidance raises 5-6% organic growth

ZURICH (Reuters) – Food giant Nestle raised its packed-year organic growth guidance to 5-6% following powerful coffee demand boosted organic sales 8.1% better than expected in the first half. of the year.

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Food groups grapple with rising costs of goods hitting gain margins, but Nestlé, with established brands like Nescafe coffee and Purina pet food, may be in a better position than others to make up for it through price increases and efficiency gains.

“We expect packed-year organic sales growth between 5% and 6%,” CEO Mark Schneider said in a statement Thursday. “We have built the foundation to deliver consistent single-digit and average organic growth for years to come.”

The company aims to accomplish organic sales growth for 2021 beyond the 3.6% achieved final year.

The world’s largest food group said organic sales growth, which excludes acquisitions and currency fluctuations, at Nestlé accelerated to 8.1% from 2.6% in the alike period final year. This was prior the 7.4% growth estimate in the company consensus.

Growth accelerated to 8.6% in the second quarter from 7.7% in the first three months of the year.

Net gain rose slightly to 5.9 billion Swiss francs ($6.49 billion), also exceeding a consensus estimate of 5.84 billion Swiss francs.

Underlying operating gain margin remained flat at 17.4% in the first half despite increases in goods, packaging and transportation costs.

Peer Unilever (ULVR.L) said final week that it expects cost inflation to be lofty among teens in the second half of the year. Read more

Nestlé said it is raising prices, improving its product mix, deploying revenue management tools and running its business more efficiently to manage cost inflation.

The company is headquartered in Vevey on Lake Geneva. It is targeting a base trading operating gain margin of around 17.5% this year and a temperate margin improvement following 2021.

(Reporting by Silk Coltrowitz) Editing by Caroline Copley, Michael Shields and Sonali Paul

Our Standards: Thomson Reuters Trust Principles.


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