Nestlé leans on price increases to offset lower sales
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Nestlé leans on price increases to offset lower sales
Nestlé continued to grow in the first half of 2025 - but high costs put some pressure on profitability. Business in China also weakened. The Swiss food giant is sticking to its margin targets for the year as a whole.
Sales for the period from January to June totalled CHF44.2 billion – around 1.8% less than in the same period last year. This was primarily due to negative currency effects caused by the strong Swiss franc.
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Organic growth – i.e. adjusted for currency and portfolio effects – accelerated slightly to 2.9% compared to 2.8% in the first quarter. This growth is almost exclusively due to price increases, for example for Nespresso and Kitkat.
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Volume growth (RIG), on the other hand, slumped to 0.2% from 0.7% in the first quarter. In the second quarter, growth was negative at 0.4%. Weak demand in the US had a negative impact. In North America, Nestlé’s most important market with a 35% share of sales, tariffs and uncertainties weighed on consumption.
Operating profit fell by around 7.1% to CHF7.29 billion (previous year: CHF7.84 billion). The corresponding margin fell from 17.4% cent to 16.5%. High raw material prices for coffee and cocoa, increased expenditure and unfavourable currency effects put pressure on margins. Net profit also slumped by 10.3% to CHF5.07 billion.
Nestlé is sticking to its targets for the year as a whole. With these figures, the food company partially fulfils analysts’ expectations. It met them in terms of organic growth, but not in terms of volume sold. Nestlé’s operating margin exceeded expectations.
Adapted from German by DeepL/ac
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