Nestle is likely to report organic sales growth of 7.1 percent for 2021 on Thursday, nearly twice as high as the previous year, thanks to robust demand for coffee and pet food, but rising input costs will begin to eat into profitability.
Markets will be focused on the company’s guidance for this year, particularly on its ability to boost pricing without jeopardizing volume growth and market share. The future of coffee, pet care, and plant-based cuisine, which profited from the pandemic, will be examined.
According to a company-compiled consensus, organic sales are predicted to expand by 7.1 percent in the entire year, including a 5.2 percent gain in volumes and a 1.8 percent increase in prices, excluding currency fluctuations and acquisitions.
The prediction indicates that growth would slow in the fourth quarter, compared to the 7.6% pace witnessed in the first nine months.
Nestle’s trade operating profit margin is predicted to fall slightly to 16.7% in 2020, from 16.9% in 2020, as a result of rising commodity, transportation, and labor expenses.
Unilever (UL) warned of a profit hit last week as it battles to raise prices enough to offset increased costs.
Nestle’s stock has dropped 8% this year, yet it still trades at a premium to Danone and Unilever at over 24 times forward earnings.
Nestle decreased its holding in L’Oreal to 20.1 percent in December and announced a fresh share buyback program worth 20 billion Swiss francs ($21.65 billion). It has just bought a majority share in Orgain, a protein powder manufacturer.
On Tuesday, European stocks gained some ground after rumors that some Russian troops stationed near Ukraine were returning to their posts, as well as some favorable corporate news.
After closing Monday 1.8 percent lower, the pan-European STOXX 600 index recovered 1.1 percent after beginning modestly lower.
Glencore (GLNCY), a UK-listed miner, rose 3.1 percent after selling a stake in Russia’s Russneft.
Randstad’s stock surged 4.5 percent after the recruitment firm’s fourth-quarter profits beat market expectations.