Nestlé’s sales fell in the first nine months of the current year. The Swiss food company made 0.4 percent less sales. This brought it to 68.8 billion francs. The high Swiss franc is to blame: it reduced sales by 7.4 percent. The company has sold fewer vitamins, minerals and nutritional supplements due to supply problems.
Organically, i.e. calculated in local currency, Nestlé grew by 7.8 percent. Significant price increases of 8.4 percent once again helped the group achieve this increase.
According to the information, animal feed and coffee increased particularly strongly. Meanwhile, Nestlé’s sales volume fell by 0.6 percent over the entire period and was still negative in the third quarter – at -0.3 percent, however, significantly less than in the previous quarter.
Fewer vitamins due to delivery problems
The Swiss giant sold fewer vitamins, minerals and nutritional supplements in the third quarter. According to Nestlé, this was not due to a lack of demand, but rather due to delivery problems. An IT problem when merging the US packaging locations led to short-term delivery bottlenecks. According to Nestlé, these are expected to be resolved by the beginning of 2024. Market growth in the vitamins, minerals and dietary supplements category, on the other hand, is back in positive territory.
The category of vitamins, minerals and dietary supplements belongs to the “Nestlé Health Science” division. This generated sales of 4.9 billion francs in the first nine months – an organic increase in the low single-digit range. In terms of volume, sales fell by 1.9 percent – although Nestlé attributed this primarily to vitamin supply bottlenecks.
The problem child “Nestlé Health Science”
Investors have been taking a closer look at the “Health Science” division for some time now. Corona helped it to take a leap a few years ago – but now the normalization is making itself felt. Nestlé therefore dedicated last year’s Investor Day to, among other things, the question of how the division’s growth should be helped again. In the first six months, the division continued to lag behind the others with an increase of 3.5 percent.
Nestlé wants to give up factory in Ireland
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542 jobs are affected, as the food company announced in a communiqué. The research and development department in the Irish town of Askeaton will be closed until the first quarter of 2025, Nestlé also announced. Production at the Wyeth Nutrition baby food factory should then be stopped a year later, by the first quarter of 2026.
The plant produces baby food that is intended exclusively for export to the Greater China region and other Asian countries. Demand there has suffered massively in recent years. The number of newborns in China has almost halved from 18 million in 2016 to an estimated 9 million this year, Nestlé said, justifying the factory closure. And: “The market, which was previously dependent on imported baby food products, is also seeing rapid growth in locally manufactured products.”
Production should now be relocated to the two existing factories in Konolfingen BE and Suzhou, China, and the research departments in Konolfingen and Shanghai should be strengthened. However, Nestlé remains open to maintaining the Irish factory if a buyer can be found. However, this has not yet been achieved, the company wrote.
When the half-year figures were presented, Nestlé boss Mark Schneider had promised stronger growth in the healthcare division: After all, the weak second half of 2022 offered a low basis for comparison, Schneider said at the time. In addition, the medical nutrition sector is developing very well. There, for example, the company produces food for people who have to stick to special diets or are fed through a tube. In the first nine months, this area recorded strong double-digit growth.
Looking ahead to the full year, Nestlé is still expected to achieve organic sales growth of 7 to 8 percent and an operating margin of between 17.0 and 17.5 percent.