Nestle plans price hikes after costs eat into profits

The world’s biggest food group Nestle (NESN.S) will raise prices further this year, Chief Executive Mark Schneider said on Thursday, after more expensive ingredients contributed to full-year net profit missing analyst expectations.

He declined to comment on the planned level of price increases, which he said were necessary to offset the damage caused by commodity price rises.

For consumers, whose spending power has already been cut by inflation at multi-decade highs, they are likely to add to concerns about strained household budgets and weakened economies.

The maker of Nescafe instant coffee and KitKat chocolate bars raised prices by 8.2% last year, but that did not fully offset the impact of increased costs for ingredients on margins.

“Our gross margin is down about 260 basis points – that is massive. That is after all the pricing we have done in 2022,” Schneider told reporters.

“We have some markets, like the U.S. and U.K., where we see strong continued inflation, and other markets like China and like here in Europe… where inflation is more muted,” Schneider said.

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