Nestle ( OTCPK:NSRGY ) plans to hike prices again in 2023 with inflation costs running high for the food giant. During Q4, organic sales rose 8.3% off a 8.2% boost in prices, but underlying trading operating profit margin decreased by 30 basis points year-over-year to 17.1% on a reported basis and by 40 basis points in constant currency.
Nestle ( OTCPK:NSRGY ) CEO Mark Schneider said further price increases are necessary to offset the impact of increased commodity prices. He pointed to higher costs in the U.S. and U.K. in particular, while China and Europe were noted to have moderating inflation trends in play.
"Our gross margin is down about 260 basis points - that is massive. That is after all the pricing we have done in 2022," stated Schneider.
Looking ahead, Nestle ( OTCPK:NSRGY ) expects another year of robust organic growth and said it will be focused on restoring gross margin, stepping up marketing investments and increasing free cash flow.
"Nestlé’s value creation model puts us in a strong position to achieve our 2025 targets and to generate reliable, sustainable shareholder returns," previewed Schneider,
Shares of Nestle ( OTCPK:NSRGY ) ended the day with a 2.53% drop in Zurich.
Read the Nestle earnings call transcript.
Sector watch: Food inflation is still running in the double digits - watch these stocks for pricing power
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Nestle plans to hike prices with no inflation relief in sight