ZURICH (Reuters) -Food group Nestle said on Thursday it expected underlying sales to rise around 5% and a broadly stable margin this year after strong demand for coffee and pet food as well as price hikes helped growth accelerate ahead of expectations in the fourth quarter.
Underlying or organic sales, which strip out currency swings and acquisitions, rose 7.5% last year, ahead of a 7.1% forecast in a company-compiled poll of analysts https://www.nestle.com/investors/analysts-consensus, thanks to a 7.2% rise in the fourth quarter, the maker of Nescafe instant coffee said in a statement.
Under pressure from high costs for raw materials, energy and transportation, the underlying trading operating profit margin declined slightly to 17.4% in 2021, from 17.7% in 2020, reflecting time delays between cost inflation and pricing actions.
Consumer goods companies have been grappling with a surge in costs for commodities, energy, transport and labour, prompting peer Unilever last week to warn on profitability as it struggles to lift prices enough to offset the higher costs.
At Nestle, organic sales growth was driven by higher volumes and a 3.1% increase in prices in the fourth quarter, up from 2.1% in the third quarter as the group passes on higher costs.
It said it expected organic sales to grow around 5% while maintaining an underlying trading operating profit margin between 17.0% and 17.5% in 2022. It also said it expected organic sales to grow 4-6% over the medium term.
Net profit at Nestle rose 38.2% to 16.9 billion Swiss francs ($18.34 billion), prompting the company to propose an increased dividend of 2.80 francs per share, up from 2.75 francs for 2020, but slightly below expectations.
($1 = 0.9214 Swiss francs)
(Reporting by Silke Koltrowitz; Editing by Michael Shields)
