Nestle Sales Expected to Slip as Tough Conditions Remain -- Earnings Preview

By Dominic Chopping

Nestle is scheduled to report first-quarter sales on Thursday. Here is what you need to know:

SALES FORECAST: The Swiss food-and-beverage major is expected to report sales of 22.37 billion Swiss francs ($24.53 billion) for the quarter, compared with CHF23.47 billion in the year prior, according to a company-compiled consensus.

Shares have fallen around 19% in the past 12 months to trade at CHF94.64.

WHAT TO WATCH:

--Organic sales growth is seen at 2.9% on the year with pricing up 3.3%, but real internal growth--a measure of sales volumes--is seen slipping 0.5%, according to the consensus estimate.

--At the full-year results in March, Nestle was cautious regarding the first-quarter outlook, with continued impact from supply-chain issues in its vitamins business, a trading day less and the timing of Easter all a concern, Helvea analyst Andreas von Arx said in a note. "Therefore, a real topline volume recovery can be expected at the earliest only in 2Q or 2H."

--Nestle has also flagged a tough consumer environment in the U.S. low price segment due to less government support. "This has led to an unsupportive share price development in recent weeks...Therefore, we think management's statements regarding their 2Q/3Q outlook could be key for the investment case momentum," von Arx said.

--Nestle has guided for 2024 organic sales growth of around 4% and a modest increase in underlying operating profit margin from 17.3% in 2023. A company consensus forecasts 2024 organic growth of 4.0%, a margin of 17.6% and real internal growth of 1.8%.

Write to Dominic Chopping at dominic.chopping@wsj.com

(END) Dow Jones Newswires

April 24, 2024 07:59 ET (11:59 GMT)

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