Investing.com – Shares in consumer goods giant Nestlé SA (SIX:NESN) declined on Thursday after it lowered its full-year sales growth guidance, amid price declines.
While the KitKat maker reported solid first-half results, with organic sales growth of 2.1% and an expanded underlying trading operating profit margin of 17.4%, investors were spooked by the revised outlook.
Nestlé now expects organic sales growth of at least 3% for the full year, down from a previous forecast of at least 4%. Despite this, the company delivered a strong first-half performance, driven by growth in key categories such as coffee, pet care, and confectionery.
However, challenges persisted in dairy and certain parts of the culinary business.
While the lowered guidance cast a shadow over the company's prospects, Nestlé's solid first-half performance and its strong market position suggest it is well-equipped to navigate challenges and deliver long-term growth.
Analysts at RBC (TSX:RY) Capital Markets noted in a report that despite increased advertising and marketing expenses, Nestlé managed to exceed EBIT margin expectations, achieving 17.4% compared to the consensus of 17.2%.
The consumer goods giant also saw Real Internal Growth (RIG) rebounds across all product categories and regions, particularly in Nestlé Health Science and North America.
However, lower pricing dampened organic sales growth in key markets such as Latin America, Greater China, and Asia, Oceania, and Africa (AOA).
Analysts emphasized that the market's expectations for 3.6% organic sales growth, 1.2% RIG, and a 20 basis point margin expansion for the full year closely align with the company's outlook.
This content was originally published on Investing.com
