December 6, 2022

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Consumer giants keep raising prices as profits come under pressure

Consumer giants keep raising prices as profits come under pressure

Nestlé and Procter & Gamble, two of the world’s largest consumer-facing companies, continued to raise prices in the last quarter, boosting sales even as shoppers declined, due to inflation, for the amounts of grain, milk, detergent and other goods they bought, the companies said on Wednesday. . Executives also said prices will remain high in the coming quarters.

NestleThe Swiss conglomerate, whose brands Kit Kat and San Pellegrino water, raised prices 9.5 percent in the third quarter compared to the same period last year, an increase of 7.7 percent in the previous quarter. The effect of the price acceleration was reflected in a slight decrease in the volume of goods sold in the last quarter, the first decline in years.

“The challenging economic environment is a concern for many people and affects their purchasing power,” Mark Schneider, CEO of Nestlé, said in a statement. The company said it expects its profit margin for this year to be 17 percent, down from 17.4 percent a year earlier.

“Pricing should continue when it comes to the remainder of this year and next, as we remain in a catch-up position towards fixing and restoring our gross margin,” Mr. Schneider said on a call with analysts. As announced by Nestlé on Wednesday intend to get it The brand’s best coffee in Seattle from Starbucks at an undisclosed price.

Procter & Gamble CompanyCrest toothpaste and toilet paper maker Charmin raised prices 9 percent last quarter. Sales volume decreased by 3 percent, mostly due to lower sales in Russia. The company’s third-quarter profit was just under $4 billion, about 4 percent less than a year earlier.

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The Cincinnati-based company said earnings growth for the current fiscal year is likely to be stable, as it delayed $600 million in additional costs it didn’t expect in the last quarter as a result of higher commodity, freight and strength costs. dollar.

Andre Scholten, chief financial officer of Procter & Gamble, told analysts that when it comes to the future sales trajectory, “we continue to believe that the majority of this growth will be price-driven with a negative volume component, as you would expect given the inflationary pressure.”

Findings from consumer giants show how rising costs of raw materials, labor and transportation are driving up label prices for a variety of products in stores, a factor behind rapid inflation in United StateAnd the Europe And in other places. Shoppers cut back on some purchases, but Nestlé, Procter & Gamble and other consumer giants like PepsiCorecently revealed stronger earnings than many analysts expected, indicating that many consumers are still able to absorb the higher prices.

This creates a challenge for the Federal Reserve and other central banks, which are campaigning to lower inflation by cooling their economies through higher interest rates.

Nestlé shares fell 1.3 percent in Zurich on Wednesday, while Procter & Gamble closed nearly 1 percent higher in New York.