Nestlé posts sales dip, amid ongoing global supply chain challenges

Nestlé has reported trading challenges in the first quarter of 2024, with sales of CHF 22.09 billion, down 5.9% against CHF23.4bn for the same period last year, writes Neill Barston.

Growth performance was down 2% across the group, with North America being hit notably hard, with its results down 5.8% for the region, as the business grappled with supply chain challenges within key ingredients, as well as weakened consumer demand as many markets continue to experience a cost of living crisis.

Its health sciences and dairy markets experienced negative growth for the period, amid a period of notable trading disruption and uncertainty across the food and drink industry, as businesses contend with high rates of inflation impacting trade, with Nestlé’s prices also rising 3.3% during the first quarter.

However, the group’s confectionery interests offered more positive results, with the company’s flagship KitKat brand posting a single digit upturn in results for the business. Significantly, this comes just a week after the company reportedly fought off a proposal from investors that would have seen Nestlé move away from the sale of indulgent food ranges, including chocolate.

The move this month was reported to have been from five institutional investors holding combined assets in the company worth $1.68 trillion, including Legal & General Investment Management, which was said to be concerned by potential risks to the Swiss-headquartered firm’s reputation if focus was concentrated away from health and wellbeing. However, the investors call, led by lobbying group ShareAction, was backed by just 11% of the company’s shareholders.

Mark Schneider, Nestlé CEO, commented: “We had expected a slow start and see a strong rebound in RIG in the second quarter with reliable delivery for the remainder of the year. A wide range of growth initiatives across the Group are now starting to deliver.

In North America, we have stepped up our innovation intensity and commercial activities, primarily in frozen food, which lost ground in the first quarter. The integration plan for Nestlé Health Science’s vitamins, minerals and supplements business is on track, with the turning point expected in the second quarter and strong growth thereafter.

Nestlé’s top priorities remain to execute with excellence, leverage our science and nutrition expertise and drive growth with our billionaire brands. We reiterate our 2024 guidance and look ahead with confidence.”

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