Nestle, the world’s largest packaged food company, has reported a decrease in sales following a recent increase in prices. On Thursday, the company announced that its first-quarter sales did not meet expectations, with a notable decline in business in North America. Total reported sales for the first quarter of 2024 were 22.1 billion Swiss Francs (£19.4 billion), a 5.9% decrease compared to the same period in the previous year. This decrease can be attributed to a global price increase of 3.4%, with a 4.6% increase in Europe.
Nestle noted that its Purina PetCare products were a significant contributor to its growth during this quarter, while its beverage sales, including the Coffee Mate brand, experienced a decline. Additionally, the company’s nutrition products and supplements also saw a decrease in sales as a result of supply constraints for vitamins, minerals, and supplements.
The packaged goods industry has been facing rising prices in recent years due to supply chain pressures caused by the COVID-19 pandemic and Russia’s invasion of Ukraine. Nestle reported a 1.4% increase in organic sales, which excludes the impact of currency fluctuations and acquisitions, falling short of the 2.9% growth that analysts had anticipated.
Jean-Philippe Bertschy from investment management firm Vontobel described the results as an “uninspiring start to the year” for Nestle. He added that while the company had warned of weak volumes in February, investors were hoping for signs of improvement based on recent results from competitors.
Nestle’s chief executive Mark Schneider acknowledged that the company had expected a slow start to 2024 but expressed confidence in a strong rebound in the second quarter. He stated, “A wide range of growth initiatives across the group are now starting to deliver.” In response to the decline in sales in North America, Schneider noted that Nestle has increased its innovation and commercial activities in the frozen food sector.
The integration plan for Nestle Health Science’s vitamins, minerals, and supplements business is on track, with a projected turning point in the second quarter and anticipated strong growth thereafter. The company expects organic sales growth of approximately 4% in 2024 and a moderate increase in its underlying trading profit margin.
