Nestle
(Picture: AFP via Getty Images)Nestlé has become the latest company to warn of more price increases to come as cost inflation in its supply chain bites.
The food and drink business, which makes everything from KitKat to Nespresso coffee machines, said today it had hiked prices by an average of just over 5% in the first quarter of 2022 and warned of more price rises to follow.
Chief executive Mark Schneider said: “Cost inflation continues to increase sharply, which will require further pricing and mitigating actions over the course of the year.”
The Smarties maker reported first quarter sales of 22.2 billion Swiss francs (£1.78 billion), reflecting growth of 7.6%.
Schneider said that the manufacturer had “stepped up pricing in a responsible manner” and had still encountered “sustained consumer demand”.
The company left full year forecasts unchanged, with organic sales growth expected at around 5% and underlying trading operating profit margin of between 17.0% and 17.5%.
Nestlé is one of the few corporate giants that continues to operate in Russia following its invasion of Ukraine. It currently only provides “essential food”, such as infant formula and medical and hospital nutrition.
It has halted the distribution of brands such as KitKat and Nesquik, halted non-essential imports and exports into and out of Russia, stopped all advertising, and suspended all capital investment in the country.
Schneider said: “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.”
Last night, fellow consumer goods giant Procter & Gamble (P&G) admitted that its “reduced operations” in Russia may not be sustainable due to sanctions, restrictions on financial institutions, supply and transportation challenges and monetary controls.
The group said there could be “additional” negative impacts on its sales, earnings and cashflow should the conflict “escalate beyond its current scope”.
P&G reported third quarter sales of sales of $19.4 billion (£14.8 billion), an increase of 7% compared to the same period the previous year.
