Nestlé, the world’s largest packaged food company, reported a drop in sales after raising prices.
The KitKat and Nescafé maker missed first-quarter sales estimates, the company revealed on Thursday, with business particularly hard hit in North America.
Reported total sales fell 5.9% internationally to 22.1 billion Swiss francs (£19.4 billion) in the first three months of 2024, compared with the same period last year.
Prices rose 3.4% globally and 4.6% in Europe.
Nestlé said its Purina PetCare range was a strong driver of growth during the quarter, while it saw an overall drop in beverage sales, including its Coffee Mate brand.
The company’s range of nutritional products and supplements also recorded negative growth, as “robust demand” was “more than offset by temporary restrictions on the supply of vitamins, minerals and supplements”.
Prices were increasing in the packaged goods industry in recent years, following supply chain pressures following the COVID pandemic and Russia’s invasion of Ukraine.
Nestlé said organic sales, which exclude the impact of currency movements and acquisitions, rose 1.4% in the quarter. Analysts, on average, expected growth of 2.9%.
Jean-Philippe Bertschy of investment management firm Vontobel described the results as an “uninspiring start to the year” for the company.
He added: “The weak [volumes]although well signaled by the company in February, it should not reassure investors who expected a sign of improvement given recent peer results.”
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Nestlé Chief Executive Mark Schneider said the company expected a “slow start” to 2024, but added he was confident there would be a “strong recovery” in the second quarter.
He said: “A wide range of growth initiatives across the group are starting to come into play.
“In North America, we intensified our intensity of innovation and commercial activities, mainly in frozen foods, which lost ground in the first quarter.
“The integration plan for Nestlé Health Science’s vitamins, minerals and supplements business is on track, with a turning point expected in the second quarter and strong growth thereafter.”
The company added that it expects organic sales growth of around 4% during 2024 and a moderate increase in its underlying trading profit margin.
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