Nestle nudges full-year sales guidance higher

Nestle increased its full-year sales forecast on Tuesday, and confirmed it was reviewing the future of its peanut allergy unit, just two years after acquiring the business.

The Swiss food giant said organic sales growth in 2022 was expected to be between 8% and 8.5%, compared to a previous forecast for 8%.

It also reiterated predictions for an annual underlying trading operating profit margin of around 17%, with underlying earnings per share in constant currency also expected to increase.

Nestle is targeting EPS growth of between 6% and 10% over the period 2022 to 2025, and a profit margin of 17.5% to 18.5% by 2025.

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

However, the firm - which owns brands ranging from Kit Kat, Perrier and Nescafe to Purina pet food and Solgar vitamins - said it had decided to "explore strategic options" for peanut allergy treatment Palforzia following weaker-than-expected adoption by both patients and healthcare professionals.

The review is expected to complete in the first half of 2023. Nestle acquired Aimmune Therapeutics, the developer of Palforzia, in October 2020, in a deal that valued the business at around $2.6bn.

In a note, Jefferies called the review "a minor embarrassment", adding: "While we are wary of under-estimating Nestle, our instinct is that unlocking incremental value over the next five years is going to be harder than it has proved to be over the last five."