Published by Global Banking and Finance Review
Posted on April 24, 2025
By Richa Naidu
LONDON (Reuters) - Nestle on Thursday said the indirect impact of U.S. tariffs was "unclear" and posted better-than-expected first-quarter organic sales growth, as the world's biggest packaged food company hiked prices for its Kit-Kat chocolate bars and Nescafe coffee.
The Swiss company maintained its 2025 outlook, saying it still expects organic sales growth to improve and estimates an underlying trading operating profit margin at, or above, 16%.
"This is based on our assessment of the direct impact of current tariffs and our ability to adapt," CEO Laurent Freixe said in a statement. "The indirect impacts – on consumers and customers, as well as currencies and commodity prices – remain unclear at this stage."
U.S. President Donald Trump has imposed broad tariffs on several countries around the world in recent months, sparking worries that the United States -- one of Nestle's biggest markets -- will be pushed into recession, with commodities and basic utilities becoming more expensive.
Trump met with major retailers, including Walmart and Target on Monday to discuss the tariffs' impact on their imports.
"(Big areas) that are impacted are, of course, our water business coming into the U.S., and espresso capsules and some of our ingredients," Nestle's finance chief Anna Manz said on a call with journalists. Nestle has previously said more than 95% of its U.S. sales are manufactured locally.
Nestle's organic sales growth, which excludes the impact of currency movements and acquisitions, rose 2.8% in the first quarter ending March 31, Nestle said. Analysts had forecast average organic sales growth of 2.5%.
The company's 2.1% price increases were above the average analyst estimate of 1.8%. Real internal growth - or sales volumes - rose 0.7% versus expectations of a 0.8% increase.
Total reported sales increased by 2.3% to 22.6 billion Swiss francs ($27.28 billion), slightly ahead of analyst expectations of 22.5 billion francs.
($1 = 0.8284 Swiss francs)
(Reporting by Richa Naidu; Editing by Christian Schmollinger, Rachna Uppal, Kim Coghill and Michael Perry)
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