Nestle’s stock price fell nearly 4.5% on Thursday after the Swiss multinational maker of Kit Kat chocolate bars and Haagen-Dazs ice cream reported lower-than-expected growth. This is another sign that inflation is weighing on the company’s profits.
The company said it expects organic sales to increase by about 4% in 2024 and underlying trading operating margins to increase “moderately.”
The company said organic sales, excluding the effects of currency fluctuations and acquisitions, rose 7.2% in the year ended Dec. 31.
Analysts’ average forecast for organic sales was 7.4%.
Nestlé’s full-year sales fell 1.5% to about $105.54 billion, below expectations of $106.32 billion.
The company’s full-year price increase was 7.5%, meeting analysts’ average expectations.
The real internal growth rate, or net sales, for the period under review was 0.3% lower than the expected 0.1% decline.
Volumes turned positive in the fourth quarter, increasing by 0.4%.
“Nestlé ended the year on a disappointing note,” Bernstein analyst Bruno Montein said.
“The 2024 organic growth guidance of 4.0% is below the current consensus of 4.9%, and the guidance of modest margin increases could put pressure on the current (margin) consensus of 17.7%. There is a sex.”
However, Nestlé’s net profit increased significantly by approximately 20% to $12.76 billion.
French food conglomerate Danone, Nestlé’s rival, saw its share price rise after reporting strong sales.
The world’s largest yogurt maker, whose brands include Evian and Baduit Water, reported sales of $29.84 billion last year, up 7% from the previous year.
The operating profit margin for the full year of 2023 was 12.6% of sales, up from 12.2% in 2022. This compares to the average analyst estimate of 12.5%.
Sales rose 5.1% in the fourth quarter ended Dec. 31, slightly above market expectations of 5%, with all three businesses – EDP, Specialized Nutrition and Waters contributing.
Danone, like rivals Nestlé and Unilever, has raised prices to cope with rising costs in its products and supply chain.
The Ghanaian government has announced that the country’s cocoa production is expected to be almost 40% below its target of 820,000 tonnes.
Strong monsoon winds and lack of rain are the main factors contributing to the shortage, along with smuggling, damage from illegal gold mining, and bud swelling disease.
Production shortfalls in Ghana and a similar deficit in Ivory Coast have led to historic spikes in global cocoa prices as traders scramble for supplies, with this season’s deficit expected to widen further, raising concerns for next season. is increasing.
On Thursday, ICE’s London cocoa futures soared above the psychological £5,000 barrier, while New York cocoa breached the $6,000 milestone.
with post wire
