Nestle Lifts Third-Quarter Sales on Americas Snacking and Frozen Food

what happened

Nestle posted higher sales in the third quarter, helped by a recovery in its snacking businesses in the Americas. The Swiss packaged-food group, which owns KitKat and Nescafe, reported sales of 22.76 billion Swiss francs, equal to $27.61 billion. Organic growth was 4.0% year on year, ahead of the 3.4% that analysts expected, according to the company's own compilation.

Since Philipp Navratil became chief executive, the company has sold its water, vitamins and ice-cream units and cut jobs to restore profitability. Frozen brands in the U.S., including Hot Pockets, DiGiorno and Stouffer's, held up well, and the confectionery business in the region added support. Real internal growth, a measure of volume, rose 2.8%. Nestle kept its guidance of 3% to 4% organic growth for the year.

why it matters

The results suggest a large food producer can still grow despite weak consumer sentiment, weight-loss drugs and higher energy costs. Vontobel analyst Jean-Philippe Bertschy said the removal of the Russian business from reporting brings welcome clarity. For consumer-sector investors, the quarter signals stability among major food companies.

market impact

Consumer staples: strong quarter supports valuations of large food producers, with Nestle's guidance unchanged.

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