Nestle to Report Nine-Month Results

Nestle is set to release its financial results for the first nine months of the year on Thursday. Here's what you should keep an eye on:

Sales Forecast

The Swiss food and beverage giant is expected to report sales of 69.54 billion Swiss francs ($77.13 billion) for the period, compared to CHF 69.13 billion in the previous year, according to a company-compiled consensus estimate. Analysts predict an organic growth of 8.1%, driven by pricing at 8.6%.

What to Watch

Organic Growth

Barclays analysts anticipate a 6.8% organic sales growth in the third quarter, with real internal growth slightly negative before bouncing back strongly in the fourth quarter. "We expect Nestle to confirm that the second half of the year will show positive real internal growth, and that their ambition remains for real internal growth to be up in 2023," they noted in a research report. However, Jefferies, a U.S. bank, pointed out that while Nestle has expressed its intention to return to positive real internal growth in H2, whether the third quarter can achieve this remains uncertain.

Petcare

Investors are likely to focus on Nestle's petcare division, according to analysts. Barclays forecasts a robust organic sales growth of 9.9% in this quarter, with real internal growth reaching 2.4% and pricing at 7.5%. "If Nestle achieves double-digit organic sales growth for the fourth consecutive year in 2023, it would be a highly impressive feat," Barclays stated.

U.S. Slowdown

Based on recent Nielsen data, Jefferies analysts predict a slowdown in growth for Nestle in the U.S. market. They highlighted share gains in the dog food and soluble coffee segments, but also noted decelerations in cat food and treats, coffee creamers, and frozen sandwiches. Barclays mentioned that Nestle appears to be more cautious with regards to U.S. consumers, citing reasons such as high housing costs, reduced stimulus payments compared to the previous year, changes in the supplemental nutrition assistance program, and student loans.