Nestle to Raise Prices in 2023 Despite Solid 2022 Earnings
Nestle, the world’s biggest food group, announced on Thursday that it will be raising prices further in the year 2023 due to more expensive ingredients. This follows full-year net profit missing analyst expectations in 2022.
Total reported sales increased by 8.4% to CHF 94.4 billion ($102.09 billion) in 2022. This was driven by organic sales growth of 8.3%, with pricing increasing to 8.2%, reflecting significant cost inflation. In addition, net acquisitions had a positive impact of 1.1%, and foreign exchange decreased sales by 0.9%.
By product category, Purina PetCare was the largest growth contributor, with continued momentum for science-based and premium brands Purina Pro Plan, Purina ONE and Fancy Feast, as well as veterinary products. Sales in coffee grew at a high single-digit rate, with broad-based growth across brands and geographies. Infant Nutrition experienced a surge in growth of at least 10%, which was seen in multiple locations and product lines. The confectionery sector saw strong growth in the single digits, largely due to the success of KitKat, seasonal items, and important local products. A mid single-digit increase was reported in the dairy sector, with coffee creamers, fortified milks, and home-baking products showing sustained growth.
Nestle India Ltd. reported a 65.50% increase in net profit at Rs 628.06 crore for the fourth quarter ended December 31, 2022. Net sales rose 13.95% to Rs 4,233.27 crore during the period under review.
Mark Schneider, Nestlé CEO, commented: “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 hold up, and our underlying earnings per share were strong. At the same time, we ensured access to nutritious products and affordable offerings globally.”
Looking to 2023, Nestlé expects another year of robust organic growth, with a focus on restoring its gross margin, stepping up marketing investments and increasing free cash flow. The board suggested a dividend of CHF 2.95 (equivalent to $3.19) per share, a boost of 15 cents, showing 28 years of continuous dividend growth.
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