Nestlé raises prices but takes hit to margins

The world's largest food company increased prices for its products in the first half of the year.

The rising price tags for food and drinks brands did not deter people from buying products from the group.

Nestlé raised its sales outlook for the year after like-for-like net sales grew 8.1 percent.

The company is following in the footsteps of peers who have reported steep price increases for their products. Consumers seem to have absorbed higher prices for staple supermarket products while cutting spending on other items.

The company said its margins had been hit by rapid increases in input costs The underlying trading operating profit margin fell due to time delays between cost inflation and pricing actions

It said margins for the full year would come in at 17 per cent, the lower end of a previously forecast range of 17 to 17 per cent. The company said it expected net sales to grow by 7 to 8 per cent, up from a previous estimate of 5 per cent.

Mark Schneider said that pricing is taking over this year. We have to protect our company too because we are doing everything we can to protect consumers.

Schneider said that it was possible for households to trade down to cheaper products in the future.

During the first six months of the year, sales of Purina pet foods and confectionery grew at double-digit rates, despite the fact that shoppers bought less chocolate bars on the go. Coffee sales were strong due to people returning to cafes and restaurants.

Changes made under Schneider in the past five years, including moving a fifth of the portfolio into faster-growing categories, will help the company navigate the current, challenging environment.

The company's shares fell by over 2% in the morning.