Nestle cut its full-year underlying sales forecast on Thursday, saying demand had slowed as customers worked their way through cupboards they stocked up with food at the start of coronavirus related-lockdowns.
Packaged food companies have weathered the crisis better than other industries as consumers bought coffee, pasta or infant formula in bulk during COVID-related lockdowns, although Nestle’s business supplying restaurants and cafes restaurants has suffered.
Organic sales growth, excluding currency swings and mergers and acquisitions, slowed to 1.3% in the three months to June, down from 4.3% in the first quarter, the maker of KitKat chocolate bars and Nescafe coffee, said in a statement.
“Most categories saw consumer destocking in the second quarter,” Nestle said.
Organic growth for the first half reached 2.8%, above a forecast for 2.3% in a company-compiled analyst poll.
Net profit grew by 18.3% to 5.9 billion Swiss francs ($6.46 billion) in the first half, ahead of a forecast for 5.07 billion francs in the poll, and the margin improved by 30 basis points to 17.4%.
The Swiss giant lowered its expectations for organic growth this year to 2-3%, from “more than 3.5%” previously.
“A solid set of figures which were ahead of street expectations and once again underscore the group’s solid characteristics,” said Kepler Cheuvreux analyst Jon Cox.
Last week, peer Unilever posted a smaller-than-expected fall in second-quarter sales, citing a pickup in eating at home.
($1 = 0.9133 Swiss francs)