ZURICH (Reuters) – Nestle will make further price increases this year, chief executive Mark Schneider said on Thursday, as rising ingredient costs weighed on the group’s profits in 2022.

Mark Schneider declined to specify the expected level of price increases, which he said are necessary to offset the impact of rising commodity prices.

The Swiss group, owner of the KitKat and Nescafé brands, increased its prices by 8.2% last year but this was not enough to offset the rising cost of ingredients, such as coffee or dairy products, which which resulted in a decline in the margin.

“Our gross margin is down about 260 basis points – that’s huge. And that’s after all the pricing action we took in 2022,” Mark Schneider told reporters.

“We have some markets, like the US and UK, where we see continued high inflation, and other markets, like China and Europe, where inflation is more subdued.”

According to Mark Schneider, inflationary pressures related to logistics, rising arabica coffee prices and dairy products have eased but remain elevated.

The rise in prices made it possible to offset a decline in volumes (-0.1%) and brought organic growth in sales to 8.3%.

Nestlé said it expects organic growth for 2023 of between 6% and 8%.

On the Zurich Stock Exchange, Nestlé shares were down 0.8% at 10:00 GMT.

The group reported for 2022 a net profit group share of 9.27 billion Swiss francs (9.42 billion euros), below a forecast of 11.6 billion francs given in a consensus published by the company which did not however take into account the depreciation of the Aimmune subsidiary of Nestlé last year, according to analysts.

(Report John Revill, Augustin Turpin, edited by Blandine Hénault)

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