Nestlé raises sales guidance again after increasing prices amid inflation

While shoppers have turned to cheaper options in some product categories, consumers have shown a willingness to pay more for what they consider "small treats", such as KitKat bars

The maker of Nescafe coffee also reiterated its plan to increase its dividend year on year in Swiss franc terms. Photographer: Stefan Wermuth/Bloomberg

Nestlé's 2022 sales guidance was nudged higher for the third time this year as the world's largest packaged food company continues to counter sharp cost inflation by raising prices.

The consumer goods industry has increased prices for everything from soap to water this year, hoping people will stay loyal to their brands despite a global cost-of-living crisis.

While shoppers have turned to cheaper options in some product categories, consumers have shown a willingness to pay more for what they consider "small treats", such as the KitKat bars and consumer wellness products made by Nestlé.

The company said it now expects organic sales growth of between 8% and 8.5%, up from an October forecast of about 8% and a July forecast of about between 7% and 8%.

Underlying earnings per share in constant currency terms and capital efficiency are also expected to increase, said Nestlé, which raised prices by 9.5% in the most recent quarter.

Organic growth, which cuts out the impact of currency movements and acquisitions, was 8.5% in the nine months to September 30, the highest since 2008.

The Swiss company said it had decided to explore strategic options for peanut allergy treatment Palforzia after "slower-than-expected adoption" by patients and healthcare professionals. It expects the review to be completed in the first half of 2023.

Nestlé confirmed its share buyback programme is targeting the repurchase of 20bn Swiss francs (€20.3bn) of shares from 2022 to 2024, with about 9.7 billion francs of shares already bought. The maker of Nescafe coffee also reiterated its plan to increase its dividend year on year in Swiss franc terms.

"Nestle is now looking to 2025 with strong self-confidence, as seen in the ambitious financial targets," Vontobel analyst Jean-Philippe Bertschy wrote in a note to clients.

- Reuters