Two of the world’s largest consumer products companies, Nestlé and Procter & Gamble, continued to raise prices last quarter, driving higher sales even as consumers cut back on cereals, yogurts, detergents and soaps. other products they were buying because inflation was squeezing their wallets, the companies said on Wednesday. Executives also said prices will remain high in the coming quarters.
Posted at 8:00 a.m.
Nestle, the Swiss conglomerate that owns Cheerios and Kit Kat, raised prices 9.5% in the third quarter compared to the same period last year, compared with a 7.7% increase in the previous quarter. The effect of accelerating prices was reflected in a slight decline in the volume of goods sold in its latest quarter, the first decline in years.
“The difficult economic environment is of concern to many people and is impacting their purchasing power,” Mark Schneider, chief executive of Nestlé, said in a statement. The company said it expected its profit margin for this year to be 17%, down from 17.4% the previous year. She indicated that the turnover for the year would increase by 8%, which is a little more than the previous forecast.
Procter & Gamble, the maker of Crest toothpaste and Charmin toilet paper, raised prices 9% in its latest quarter, while sales volumes fell 3%. The company’s third-quarter profit was just under US$4 billion (CDN5.5 billion), about 4% lower than a year earlier.
The Cincinnati-headquartered company said profit growth for the current fiscal year would likely be near flat, due to $600 million in additional costs it hadn’t forecast in the quarter. previous year, due to rising raw material and freight costs, as well as the strong dollar.
Profits greater than expected
Earnings from consumer giants show how rising costs of raw materials, labor and transportation are translating into higher list prices for a range of products in stores, a factor behind rapid inflation in the United States, Europe and elsewhere. Consumers have reduced some of their purchases, but Nestlé, Procter & Gamble and other consumer giants, such as PepsiCo, recently reported better-than-expected profits.
This poses a challenge for the Federal Reserve and other central banks, which are waging a campaign to bring inflation down by cooling their economies with higher interest rates.
Shares of Nestlé fell slightly in Zurich on Wednesday, while those of Procter & Gamble rose more than 3% in New York.
This article was originally published in The New York Times.