The management is reformulating its ambitions for the entire financial year, raising the growth objective and moderating that for the operating margin.
The Nestlé food colossus is posting organic growth of 8.1% in mid-2022 for a turnover of 45.58 billion francs. The management is reformulating its ambitions for the entire financial year, raising the growth objective and moderating that for the operating margin.
Net of the contribution from Russia, where Nestlé ended up reducing its activities to only staple foods, volume growth (RIG) was 1.7%. Price adjustments fueled revenue growth by 6.5 percentage points.
Organic growth was driven by pet food. Revenues from coffee swelled by a tenth, while those from chocolate and bottled water exceeded that mark. Receipts from dairy products, on the other hand, only increased by around 5%.
Blunt profitability
The margin before interest expense and taxes and unexpected factors eroded by some 50 basis points to 16.9%, for an adjusted Ebit of 7.68 billion. Net profit fell 11.7% to 5.25 billion, according to the report released on Thursday.
“Cost control and efficiency gains have enabled us to limit the effects of unprecedented inflation and supply constraints on the development of our margins”, welcomes the Chief Executive Officer (CEO) Mark Schneider, quoted in the post.
The price effect was the only growth factor in the United States, where receipts swelled from 9.6% to 12.1% despite a 0.2% erosion in volumes. The increase was limited to less than 5% on the Old Continent, where organic growth reached 7.1% for a turnover of 9.3 billion.
In the Asia, Oceania and Africa zone (AOA, excluding Greater China) the increase reached 8.2%, including 6.1% tariff effects, for a total of 9.3 billion as well. Added to this are 2.7 billion in the Middle Empire, Hong Kong, Macao and even Taiwan, after growth limited to 2.3%.
The multinational from Lake Geneva posted growth of nearly 14% in Latin America, of which more than 9% was attributed to prices, for revenues of 5.7 billion.
Despite declining volumes, Nespresso managed to maintain its turnover at 3.2 billion.
Accelerated cruise rate
The performance is more or less in line with the AWP consensus projections, above for sales and adjusted Ebit, below for net profit.
The growth target for 2022 has been raised to between 7 and 8%, against 5% previously. The Ebit margin must be established at the bottom of the corridor of 17 to 17.5% already articulated.
Analysts applaud the demonstration by the Veveysan giant of its ability to impose its prices. The expected decline in profitability is proving to be less severe than expected and the outlook in this area remains robust. The new growth objectives for the full year are in line with the pace already set in the first six months.
Investors for their part seemed inclined to cash in their profits. At 9:50 am, the registered Nestlé sank 1.7% to 115.42 francs, seriously handicapping an SMI (+0.03%) just afloat.