Nestle’s 2022 earnings fell short of market expectations owing to rising input material prices.
Nestle, the world’s largest food company, plans to raise the prices of its goods again this year, according to CEO Mark Schneider. The group’s 2022 earnings fell short of market expectations due to the high cost of raw materials.
Numerous other food firms have provided customers with a more optimistic pricing estimate for 2023. Yet, Schneider claims that the price rise is necessary to counteract the impact of increased ingredient prices. This is terrible news for customers since inflation has reached its greatest level in decades, limiting their capacity to spend.
Nescafe instant coffee and KitKat chocolate makers raised product prices by 8.2% last year but have struggled to fully offset the impact of growing input costs.
KitKat chocolate makers raised product prices by 8.2% last year
“Our gross margin has dropped by roughly 260 basis points, which is a significant amount. It includes price increases in 2022, according to Schneider.
Consumer goods manufacturers have boosted prices in reaction to rising raw material costs in the aftermath of the Russia-Ukraine war.
Last week, Unilever announced that it will continue to hike prices for detergents, soaps, and packaged goods to cover growing input costs, but will do so less often in the second half of 2023.
Pepsico announced this week that it will cease raising prices after numerous increases last year helped it achieve sales and earnings that were above analysts’ expectations.
Nestle’s net profit decreased to 9.3 billion Swiss francs, falling short of the 11.6 billion francs expected. “Nestle seldom falls short of expectations, but 2022 is the year they’ve had that difficulty,” said Bruo Monteyne.
Nestle says it expects organic sales growth of 6-8% by 2023, excluding currency changes and brand purchases.
The company’s revenue is expected to increase by 8.4% to 9494 billion Swiss francs ($102.31 billion) in 2022.
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Source: Vietnam Insider