Nestle’s said its confectionery sector recorded high single-digit growth,supported by a strong sales development for KitKat, after the company reported its nine-month sales for 2021, raising full-year organic sales growth guidance.
The Zurich-based food giant said it now expects full year organic of 6-7% after strong retail sales and a recovery in out-of-home food consumption that pushed organic sales 6.5% higher in the third quarter.In its statement to the media, Nestle said organic sales rose 7.6% in the first nine months, beating the company’s own forecast for a 6.6% increase.
The KitKat maker had previously raised its full-year guidance to 5-6% in July. The operating profit margin, under pressure from high raw material costs, is expected to be stable, it said.
“The underlying trading profit margin is expected around 17.5%, reflecting initial time delays between input cost inflation and pricing,” Nestle said, keeping its mid-term outlook for “continued moderate margin improvement” unchanged.
Rising costs
Like its peers, Nestle is facing pressure on margins from rising input costs. Global supply chains are under strain due to factors such as a resurgence of COVID-19 cases in Asia and staff shortages in the United States, increasing the price for its ingredients, according to Reuters.
The Swiss company cautioned last month that input cost inflation would likely be even higher in 2022, which could at least temporarily squeeze margins until price increase take effect.