Nestlé CEO Mark Schneider moves to offer reassurance to Ukraine-based employees

The CEO of Nestlé, Mark Schneider, has moved to offer reassurance of support for its employees in Ukraine amid ‘unspeakable human suffering’ from the ongoing conflict with Russia, as the business records a first quarter upturn, reports Neill Barston.

As previously reported, the company confirmed it is halting sales of KiKat in Russia, as a broad range of global corporations and sector businesses including Mondelez International, Mars and Ferrero are scaling back their activities and investment in the country following its invasion of its Eastern European neighbour at the end of February.

Nestlé presently employs a total of 5,800 people in Ukraine, and it has confirmed that it has largely maintained operations in the west of the country, whereas operations of its factory in Kharkiv were halted due to heavy shelling. In response, the UN has called for a peaceful resolution to the situation, which has seen a reported total of around 10 million Ukrainians displaced from their homes.

Globally, an unprecedented level of multi-billion sanctions have so far been applied to Russia, and while peace talks have sporadically been held, the conflict has continued into a new phase away from Kyiv, into the East of the country.

In terms of its wider actions, Nestlé noted that its employees volunteered to transform the company’s Kharkiv Distribution Centre into a donation centre providing food to the local community. To date, the company confirmed that it has donated more than 40 million servings of food, beverage and nutrition products across the country. However, it has faced criticism, along with other major brands, for its decision to continue operating in Russia, which led to its decision regarding KitKat sales and halting sales of other non-essential lines.

The business detailed additional measures of support including providing staff with advance salary payments, one-off payments to support relocation, salary continuance for the foreseeable future and job offers in other operating companies. In addition, the company has established support hubs in neighbouring countries including Poland for those who have fled the country. This has included part of the company’s factory in Rzeszow, Poland being converted into accommodation for those fleeing Ukraine.

pic: Nestlé

Mark Schneider (pictured above at a previous results press conference), Nestlé CEO, commented: “In these first months of the year, the war in Ukraine has caused unspeakable human suffering. We remain focused on supporting our colleagues there and providing humanitarian relief, while standing with the international community in the call for peace.

“Amid this challenging environment, we delivered strong organic sales growth with resilient RIG. We stepped up pricing in a responsible manner and saw sustained consumer demand. Cost inflation continues to increase sharply, which will require further pricing and mitigating actions over the course of the year. The Nestlé team addressed these headwinds and advanced our long-term strategy and sustainability objectives with agility and determination. We confirm our guidance for the year.”

Quarterly results

Despite issues surrounding the Ukrainian conflict, the company posted an improved first quarter figures, with total reported sales increased by 5.4% to CHF 22.2 billion across the group.

The Swiss-headquartered business’s core KitKat brand reportedly continued to contribute strongly to an improved financial position, and as a category, confectionery reported mid single-digit growth, with a strong recovery reported for its gifting products.

For its European market, the company saw mid single-digit growth, underpinned by higher pricing and e-commerce expansion. It produced a results upturn in many of its business segments, particularly with sales for its KitKat flagship chocolate series.

In terms of regional performance within China, confectionery posted high single-digit growth, which was reportedly led by demand for Shark wafer chocolate and solid growth for Hsu Fu Chi, its partner business delivering a wide range of chocolates, biscuits and wider confectionery ranges.

Within Latin America, the company also reported double-digit growth in Chile, with confectionery again taking centre stage regarding stand-out performers within its portfolio, including the recently acquired La Fete premium direct-to-consumer brand, as well as ice cream recording solid results.

Furthermore, organic growth for the period was put at 7.6%, with its health science division reporting notable success, after acquiring a major stake in the Orgain, plant-based nutrition company.

According to the company, its forecast was for organic sales growth around 5% and underlying trading operating profit margin between 17.0% and 17.5%. Underlying earnings per share in constant currency and capital efficiency are expected to increase.




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