Shares of Nestle SA were gaining around 4 percent in Swiss trading after the food and beverage giant on Wednesday raised its fiscal 2021 organic sales growth forecast after reporting higher sales in the first nine of the year.
For the full year, the company now expects organic sales growth between 6 percent and 7 percent, higher than previously expected organic sales growth between 5 percent and 6 percent.
The underlying trading operating profit margin is still expected to be around 17.5 percent. The outlook reflects initial time delays between input cost inflation and pricing, as well as the one-off integration costs related to the acquisition of Bountiful Co.’s core brands.
Underlying earnings per share in constant currency is expected to increase this year.
Beyond 2021, the company’s mid-term outlook for continued moderate margin improvement remains unchanged.
For the nine-month period, total sales increased 2.2 percent to 63.30 billion Swiss francs from 61.91 billion francs in the previous year. Net divestitures decreased sales 3.3 percent.
Organic growth in sales was 7.6 percent with real internal growth or RIG of 6 percent and pricing of 1.6 percent. The higher results were driven by broad-based contributions from most geographies and categories. Continued momentum in retail sales, steady recovery of out-of-home channels, increased pricing and market share gains benefited the results.
Organic growth was 7.1 percent in developed markets, while organic growth in emerging markets was 8.3 percent. By product category, the largest contributor to organic growth was coffee, fueled by strong momentum for the three main brands Nescafé, Nespresso and Starbucks.
Starbucks products recorded 15.5 percent growth, with sales of 2.2 billion francs.
Zone Americas sales were 24.6 billion francs, down 1.5 percent from last year on a reported basis, but up 8.4 percent organically with strong RIG of 5.2 percent supported by volume and mix.
Zone Europe, Middle East and North Africa or EMENA sales were 15.5 billion euros, up 3.6 percent on a reported basis and up 7.2 percent organically.
Sales in Zone Asia, Oceania and sub-Saharan Africa edged down 0.6 percent, but organic growth was 4.1 percent. Nespresso sales grew 11.3 percent, and Nestlé Health Science sales climbed 33.8 percent.
Nestlé further said it expects to invest 1.2 billion francs over the next five years to support the adoption of regenerative farming practices by its network of more than 500 000 farmers and 150 000 suppliers.
In Switzerland, Nestle shares were trading at 117.10 francs, up 3.67 percent.
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