Inflation cut profit margins of Nestle, which makes KitKats and many other food products
Inflation cut profit margins of Nestle, which makes KitKats and many other food products AFP News

Swiss food giant Nestle said on Thursday sales rose last year but inflation nibbled at its margins, while net profits plunged due to asset disposals in 2021.

Sales rose by 8.4 percent to 94.4 billion Swiss francs (95.5 billion euros, $102.3 billion). However most of that was due to the company hiking prices.

Nestle, which makes Nespresso capsules, Maggi soups and KitKat chocolate bars, estimated its real internal growth to be just 0.1 percent.

"Last year brought many challenges and tough choices for families, communities and businesses," Nestle chief executive Mark Schneider said.

"Inflation surged to unprecedented levels, cost of living pressures intensified and the effects of geopolitical tensions were felt around the world," he added.

Nestle said its underlying trading operating profit margin dipped by three tenths of a percentage point to 17.1 percent.

Net profits fell by 45 percent to 9.3 billion francs in 2022 but the comparison with 2021 is deceptive since the disposal of shares Nestle held in L'Oreal boosted 2021 earnings.

The company said underlying earnings per share rose by 8.4 percent, and by 9.4 percent when currency changes are stripped out.

Nestle's board proposed a dividend of 2.95 francs per share, an increase of 15 centimes.

"Looking to 2023, we expect another year of robust organic growth, with a focus on restoring our gross margin," said Schneider.

For 2023, the company expects sales growth of between six and eight percent when excluding exceptional changes, down from the 8.3 percent registered on this basis in 2022.

It hopes to hold, if not improve, its underlying trading operating profit margin, setting a target range of between 17.0 and 17.5 percent.

Underlying earnings per share in constant currency is expected to rise between six and 10 percent.