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Nestle lifts sales guidance as it faces ‘sharp increase’ in costs

Food and drink giant Nestle has been hit by a “sharp increase” in costs but lifted its sales guidance for the year.

The KitKat and Cheerios maker updated investors about its latest trading ahead of an investor seminar on Tuesday.

The Swiss company said it expects organic sales growth between 8% and 8.5% for the year, improving upon previous guidance of around 8%.

It said organic sales growth, which does not include acquisitions or currency changes, was 8.5% over the nine months to September.

Earlier this year, the group hiked prices by more than 5% and warned that customers could face further increases due to inflation.

On Tuesday, the company said it is set to increase profit margins despite the “impact of a sharp increase in cost inflation in 2021 and 2022”.

Nestle also confirmed that it is considering a sale for peanut allergy treatment business Palforzia, only two years after buying the division.

It is exploring strategic options for the arm following “slower than expected adoption” by patients.

Mark Schneider, Nestle chief executive officer, said: “We have made significant progress in recent years, accelerating organic growth, increasing margins and enhancing capital efficiency.

“Today, we outline our value creation model and targets for 2025 as we aim to deliver consistently in turbulent times.

“We will continue to invest for future growth, investing behind our brands, delivering impactful innovation, leveraging digitalisation and improving speed and agility.

“Creating shared value for stakeholders remains our focus, with Good for You, Good for the Planet at the heart of our strategy.”