- Nestle ADR (OTC:NSRGY) reported Q1 2023 sales growth of 5.6% Y/Y to CHF23.5 billion, with a positive impact of 0.3% from net acquisitions.
- Organic sales grew 9.3% Y/Y, led by strong pricing growth of 9.8%, reflecting higher cost inflation.
- Organic sales came 2 percentage points above analysts’ estimates, making this one of Nestle’s biggest beats in years, as per Bloomberg.
- As per the report, the expectation-beating growth came amid a portfolio shakeup that was expected to weigh down short-term revenue growth. Nestle has been eliminating underperforming product lines to improve profitability in the long term.
- The company increased pricing by around 10% across all geographies, expect China (+3.9%).
- By product category, organic growth was led by Purina PetCare (+15.7% Y/Y) on solid momentum for science-based and premium brands Purina ONE, Purina Pro Plan and Friskies.
- The results show resilience among big food and consumer-staples companies in the face of the highest inflation in decades: consumers appear to be accepting higher prices without big declines in volume, quoted Bloomberg.
- As part of its portfolio restructuring initiative, Nestlé announced a joint venture with private equity firm PAI Partners for Nestlé’s frozen pizza business in Europe. The transaction is expected to close in the second half of 2023.
- Outlook: The company reaffirmed guidance for organic sales growth at 6% – 8%, underlying trading operating profit margin at 17.0% – 17.5% and underlying EPS (in constant currency) growth at 6% – 10%.
- Price Action: NSRGY shares are trading higher by 0.18% at $129.60 on the last check Tuesday.
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