Nestle reports 5.9% sales decline despite price hikes 

SWITZERLAND – Nestle, the world’s largest packaged food company, has reported a 5.9 percent decline in sales for the first quarter of 2024 despite implementing price increases.  

The KitKat and Nescafe maker missed first-quarter sales estimates, with business particularly impacted in North America. 

Total reported sales dropped by 5.9 percent internationally to CHF 22.1 billion (US$24.14B) in the first three months of 2024 compared to the same period last year. Prices rose globally by 3.4 percent, with a higher increase of 4.6 percent in Europe. 

While Nestle’s Purina PetCare range drove growth during the quarter, overall drinks sales, including the CoffeeMate brand, experienced a decline.  

The nutrition products and supplements segment also faced negative growth due to temporary supply constraints for vitamins, minerals, and supplements. 

The packaged goods industry has been grappling with rising prices amid supply chain pressures exacerbated by the COVID-19 pandemic and Russia’s invasion of Ukraine. 

Despite these challenges, Nestle reported organic sales growth of 1.4 percent in the quarter, falling short of analysts’ expectations. 

In the AOA region (Zone Asia, Oceania, and Africa, Nestle recorded a 3.6 percent organic growth with pricing at 4.1 percent. The company quoted Central and West Africa, India, and the Philippines as the key drivers of growth. 

In these markets, affordable offerings fuelled growth, led by Maggi, Lactogen, and Nescafé. The Zone saw market share gains in confectionery, coffee, and pet food, with losses in dairy. 

Nestle chief executive Mark Schneider said the firm had expected a “slow start” to 2024 but added he was confident there would be a “strong rebound” in the second quarter.  

He said: “A wide range of growth initiatives across the group are now starting to deliver. In North America, we have stepped up our innovation intensity and commercial activities, primarily in frozen food, which lost ground in the first quarter.  

The integration plan for Nestle Health Science’s vitamins, minerals, and supplements business is on track, with the turning point expected in the second quarter and strong growth thereafter.” 

Looking ahead, Nestle anticipates organic sales growth of around 4 percent for 2024 and a moderate increase in its underlying trading profit margin. 

Meanwhile, in India, Nestle reported a larger-than-expected increase in quarterly profit, benefiting from higher product prices and demand for packaged food.  

Nestle India’s net profit for the quarter that ended March 31 rose to Rs9.34 billion (US$112M), compared to Rs 7.37 billion (US$88.4M) a year earlier. 

Additionally, Nestle India announced a joint venture with drugmaker Dr. Reddy’s Laboratories to produce supplements and nutraceuticals, capitalizing on the growing demand for health-focused food and beverages.  

Despite revenue growth in the March quarter, Nestle India expressed concerns about soaring commodity prices, particularly for coffee and cocoa, and anticipated challenges with rising milk prices during the upcoming summer months. 

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