SWITZERLAND – Price hikes implemented by Nestle have helped the company post an organic growth of 7.6% and a net sale increase of 5.4% during the first three months of the year.
The world’s largest food company said in its latest financial update that it had increased pricing by 5.2 per cent in the quarter to offset steep commodity inflation.
“We stepped up pricing in a responsible manner and saw sustained consumer demand,” said Mark Schneider, Nestlé chief executive.
“Cost inflation continues to increase sharply, which will require further pricing and mitigating actions over the course of the year.”
The price rises were largest in North and Latin America, where Nestlé drove up pricing by 8.5 percent and 7.7 percent respectively.
Purina PetCare was the largest contributor to organic growth led by its science-based and premium brands Purina ONE, Purina Pro Plan and Fancy Feast as well as veterinary products, according to Nestlé.
Coffee saw high single-digit growth while Sales in confectionery grew at a double-digit rate, with strong growth for KitKat and gifting products.
Water posted double-digit growth, driven by a further recovery of out-of-home channels, dairy on the other hand reported mid-single-digit growth, while growth in Infant Nutrition reached a mid-single-digit rate, supported by improved sales developments in the Americas and Europe.
Nestlé Health Science recorded mid-single-digit growth, reflecting the high demand for Medical Nutrition and healthy-aging products.
The company’s retail sales jumped 5.9% with e-commerce sales posting a growth of a 5.0%, and organic growth in out-of-home channels reaching 35.6%.
The maker of Maggi noodles noted that during the quarter, net divestitures decreased sales by 1.3%, largely related to the Nestlé Waters North America transaction, which closed on March 31, 2021.
Divestitures were however partially offset by acquisitions, including the core brands of The Bountiful Company.
Nestlé’s impressive performance follows the company’s decision to significantly scale back its business in Russia in protest of the country’s invasion of its neighbour Ukraine.
Although the company has maintained operations in the country to supply essential nutrition, it has halted any planned investments and suspended sale of renowned Nestlé brands such as KitKat and Nesquik, among others.
In the latest financial release, Nestle also noted that it had excluded the Russia region from its organic growth calculations, “given significantly disrupted trading conditions and Nestlé’s decision to focus on providing essential food.”
Despite the Russia-Ukraine crisis and commodity inflation, Nestlé expressed confidence in its operations and has confirmed its 2022 outlook.
“We expect organic sales growth around 5% and underlying trading operating profit margin between 17.0% and 17.5%,” Nestlé Said.
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