How did Nestlé beat quarterly sales expectations
Nestlé, the world’s largest packaged food company, reported better-than-expected first-quarter organic sales growth on Thursday, buoyed by price hikes on key products such as Kit-Kat chocolate and Nescafé coffee.
However, despite the strong financial performance, the company remains cautious about the ongoing uncertainty surrounding the indirect impact of U.S. tariffs on its operations.
The Swiss multinational’s organic sales growth for Q1 2025 rose by 2.8%, surpassing analysts’ forecasts of 2.5%. This growth was driven in part by a 2.1% increase in prices, which exceeded the market consensus estimate of 1.8%.
However, real internal growth—which measures changes in sales volumes—was a more modest 0.7%, slightly below the expected 0.8% increase.
Overall, Nestlé’s reported sales increased by 2.3%, reaching 22.6 billion Swiss francs ($27.28 billion), a figure slightly ahead of analysts’ expectations of 22.5 billion francs.
While the company was able to boost its revenue through price increases, questions remain about how U.S. tariffs—especially those imposed by President Donald Trump on various global trade partners—are affecting Nestlé’s operations.
Laurent Freixe, CEO of Nestlé, acknowledged that while the direct impact of the tariffs on the company’s operations had been assessed, the indirect effects—including on consumers, customers, currencies, and commodity prices—were still unclear.
Freixe further elaborated that Nestlé’s ability to adapt to the evolving tariff landscape had helped mitigate some of the direct impacts, but the uncertainty surrounding the broader economic consequences remained a challenge.
The company, however, maintained its 2025 outlook, forecasting continued organic sales growth and an underlying trading operating profit margin at or above 16% for the year.
Despite the looming tariff concerns, Nestlé pointed out that more than 95% of its U.S. sales are produced locally, which has helped shield the company from some of the worst effects of trade tensions.
Anna Manz, Nestlé’s finance chief, noted that the company’s water business, as well as products such as espresso capsules and certain ingredients, had seen the most significant impact from the tariffs.
The company also faces challenges in managing commodity price volatility, particularly as tariffs contribute to inflationary pressures on raw materials.
Despite these hurdles, Nestlé’s ability to adapt to the shifting trade environment has allowed it to continue driving growth in its core markets, even in the face of global uncertainty.