Nestle Raises Full-Year Organic Growth on Price Increases & Coffee Sales
Nestle raised its sales guidance on Wednesday, now forecasting full-year organic growth of 6-7% following strong coffee sales and price hikes pushing organic sales 6.5% higher in Q3.
The company has found a solution to rising input costs, which food groups have been facing, via price increases of 2.1% in Q3.
"The company knocked it out of the park for the third quarter. Most companies with strong brands will be able to pass on prices and I think the market still does not get that”, Kepler Cheuvreux analyst - Jon Cox commented.
Nestle shares, up 8% so far this year, were expected to open 0.8% higher in pre-market trading. Organic sales of the company rose 7.6% in the first nine months, the group said in a statement, beating a forecast for a 6.6% increase in a company-compiled consensus.
Aside from prices, strong coffee sales have also become a driver, with Starbucks-branded products demonstrating a 15.5% growth and Nespresso portioned coffee - 11% growth.
Nestle still expects an underlying trading operating profit margin at about 17.5% this year and a "continued moderate margin improvement" in the midterm.
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