VEVEY, SWITZERLAND — Premium, science-based and veterinary brands by Purina PetCare led overall organic growth through the first quarter of Nestlé’s fiscal year 2022. The pet care business was a category leader for growth in North America, Europe and Latin America, posting double-digit growth in all three regions over this three-month period.
Sales for the company’s pet care business topped 4.12 billion Swiss francs ($4.29 billion USD) over the first three months of 2022, up 13.5% from the same period in 2021. Pet care reported the second-highest net sales figures across all Nestlé product categories, following powdered and liquid beverages at 6.06 billion Swiss francs ($6.33 billion USD). Organic sales growth for the pet segment was 13.6%, the second-highest growth rate across all product categories.
“Growth was broad-based and supported by increased pricing, with market share gains, particularly in coffee, pet food, culinary and Nestlé Health Science,” said Francois-Xavier Roger, chief financial officer, in an April 21 earnings call. “…Sales in most segments and geographies grew at a double-digit rate with market share gains. Purina’s performance was driven by sustained strong demand for premium products Purina Pro Plan and Purina ONE, as well as veterinary products.
“The recently launched ProPlan LiveClear continues to resonate strongly with consumers and organic growth reached 65%. The product is now distributed in 25 markets,” he added.
Roger also noted Purina is gaining market share in Asia, although this market is still relatively small and “still at a relatively early stage of development” for the company compared to those in Europe and the United States.
Across its portfolio, the company increased pricing 5.2% to combat cost inflation. The company’s pet care business saw the steepest price increase at 7.7%
“Cost inflation continues to increase sharply, which will require further pricing and mitigating actions over the course of the year,” said Mark Schneider, chief executive officer at Nestlé.
Overall, Nestlé reported 5.4% sales growth to 22.2 billion Swiss francs ($23.2 billion USD) over the quarter. Organic sales growth was 7.6%, supported by broad market share gains and growth across categories and regions, the company shared.
Nestlé confirmed its full-year guidance, which includes organic sales growth around 5%, an underlying trading operating profit margin between 17% and 17.5%, and increases to underlying earnings per share and capital efficiency.
Russia and Ukraine
Nestlé now excludes Russia from organic sales growth because of disruptive trading conditions and the company’s decision to focus on essential food in the country, Roger said.
“The impact from cost inflation is expected to be significantly higher in 2022 versus 2021,” he said. “Compared to when we talked to you in February, we now expect an even greater inflationary impact as a result of the war in Ukraine.”
The war has made it more difficult for Nestlé executives to share expectations on inflation, said Ulf Mark Schneider, chief executive officer.
“This is a highly volatile situation, and I think the company is fully focused on navigating this very particular circumstance where we have significant input cost inflation, and then of course, we have to take responsible pricing action, but this is not an environment where it's easy to share detailed forecasts,” he said. “And it's really literally day-to-day, week-by-week.”
He defended Nestlé’s decision to continue selling food in Russia.
“It's very hard, as you can imagine, for a food company to tell them to stop supplying food, just like it's hard for a pharma company to stop making medicines or for a hospital to stop accepting patients,” Schneider said. “And for us, a presence on the ground is never just a business opportunity. It also comes with what I call extensive rainy-day responsibilities for the communities we serve.”
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