Sustaining volume growth key for Nestle as consumption shows slowdown

The higher input cost impact on margins may be offset by premiumisation, cost efficiency measures and price hikes

After a double digit volume growth in CY2018, Nestle will have a twin challenge of maintaining margins amid rising input costs while maintaining volumes at a time when consumption is showing signs of slowdown.

In CY2018, benign input trajectory helped the company improve its profitability. A sharp increase in advertising spends enabled it to garner higher volumes.  Nestle witnessed 230 basis point rise in EBITDA (earnings before interest, tax, depreciation and amortisation) margin to 23.2 per cent during the year. Nestle follows January-December accounting year. The stock rose about 2.5 per cent since March 12, when it released