Nestle SA, the world’s biggest food company, forecast profitability will probably improve after higher raw material and shipping costs led to the weakest margins in four years.
(Bloomberg) — Nestle SA, the world’s biggest food company, forecast profitability will probably improve after higher raw material and shipping costs led to the weakest margins in four years.
The underlying operating margin should be in a range of 17% to 17.5% in 2023, the KitKat maker said Thursday. The margin was 17.1% last year.
Consumer-goods companies face the challenge of raising prices on consumers without driving them away. While Nestle only started seeing volume declines in the second half of 2022, rival Unilever Plc has had drops throughout the entire year.
Nestle had the fastest sales growth in more than two decades, mainly driven by pricing. The company forecast revenue growth of 6% to 8% this year.
The maker of Nescafe coffee suffered a 4.9% drop in volumes in North America in the fourth quarter as it pruned its portfolio and as demand from restaurants moderated.
(Updates with sales forecast in fourth paragraph)
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