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Nestlé reported lower than expected full-year sales as the world’s biggest food company pinned the blame on a continued squeeze on household budgets.

The Swiss company said on Thursday that organic sales climbed 7.2 per cent last year, trailing the 7.4 per cent forecast by analysts.

Faced with a rise in its own costs, Nestlé has been lifting prices over the past 12 months, though the pace of increases moderated in the second half of the year. Prices rose 7.5 per cent year on year in the second half, matching forecasts, and down from a 9.5 per cent pace in the first half.

“Unprecedented inflation over the past two years has increased pressure on many consumers and impacted demand for food and beverage products,” said Nestlé chief executive Mark Schneider.

The shares fell more than 3 per cent in morning trading.

The Kit Kat maker also forecast organic sales growth of about 4 per cent in 2024, below analysts’ estimates of 4.9 per cent. The group also said it expected a “moderate increase” in its profit margin. The company said margins for the full year were 17.3 per cent, just shy of 17.4 per cent expected by analysts.

Analyst Bruno Monteyne said the food giant had ended the year on a “disappointing note” and that the misses on volume and margin were “not the kind of reassuring Nestlé results investors are used to”.
Consumer goods companies have struggled to maintain sales, instead relying on ever higher prices to boost revenues. In Europe, Nestlé’s volumes fell 2.4 per cent last year, while prices rose 10.6 per cent.

North America saw a sales decrease, while other regions combined posted high single-digit growth.

Analysts also flagged issues related to an IT integration at its health science division, which is taking longer to correct than previously indicated.

Schneider admitted he “underestimated” the problem but promised to fix it. “We regret that we were not able to live up to real original expectations . . . but we’re also confirming the long-term viability of this business.”

Jefferies analysts said: “There will probably be more pressure to understand exactly what is going on here and the background to the IT issue in terms of internal communication and management alignment more broadly.”

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