John Revill

ZURICH (Reuters), – The first quarter earnings of the industrial robot manufacturers showed that they were able to pass on rising costs to their customers. This is despite concerns about higher prices affecting demand.

Some of Europe’s largest companies have reported an increase in sales for the first quarter. KitKat manufacturer Nestle, Evian water owners Danone, and Dulux paintmaker Akzo Nobel (OTC) said they achieved these gains while increasing their prices.

ABB, an engineering company, and Husqvarna, a manufacturer of gardening equipment reported high demand despite increasing prices.

Tesla (NASDAQ 🙂 achieved a record breaking performance outside Europe on Wednesday. Higher prices and fewer supply chains helped to protect the electric car maker from rising costs and chaos. [nL3N2WI3AV]

Despite the cheers of investors with Nestle ABB and Akzo Nolen enjoying share price increases, this strategy raises concerns about the ability of households to handle the situation and the outlook for 2019.

Consumers are feeling squeezed due to rising interest rates, lagging pay offers and shrinking disposable income. Their shopping expenses are increasing.

Berenberg stated in a note that “food and price inflation pressure will be greater and more persistent.”

According to the bank, “The outlook for this sector has become more difficult.” “Nevertheless, grocery consumption will remain strong, however, inflation will outperform.”

Nestle, Nescafe’s owner reported a 7.6% increase in organic sales over the first three months. This was despite large price hikes.

The measure, which strips out currency swings and M&A deals, beat a 5.0% average forecast in a company-compiled consensus thanks to price increases of 5.2%.

The Swiss firm, which makes Purina pet food as well as Nespresso, stated that they increased their pricing “in a responsible way and saw sustained consumer interest.”

There are more hiking opportunities available

According to one of the largest food groups in the world, current price hikes are unlikely to end.

Nestle stated, “The cost inflation rate continues to rise sharply. This will demand further pricing and mitigation actions throughout the year.”

French peer Danone reported a 7.1% sales rise late Wednesday night.

This year’s world-leading yoghurt producer benefited both from the price rises at the beginning of 2015 and easier comparisons in China.

Higher prices might be a delicate topic on France’s home market, where the crisis in living costs sets the stage for the Presidential runoff between incumbent Emmanuel Macron or his right-wing opponent Marine Le Pen.

The price rises are not affecting demand for Dutch paint-and-coatings manufacturer Akzo Nobel. On Thursday, the company beat its quarterly core earnings estimates and reported a 17% increase on prices over a year ago.

Chief Executive Thierry vanlancker stated that the company’s aggressive pricing policies had allowed it to manage the “unprecedented variable cost inflation” that impacted the industry in the third quarter.

ABB and its factory robots reported 21% increases in their orders during the first quarter. This was despite higher prices.

Bjorn Rosegren, chief executive, said that price increases in components and metals as well as higher transport costs were not going to slow down.

ABB had to keep raising prices in order to cope with the demand, but customers were not hesitant to equip their plants with new products.

Rosengren stated to reporters, “They’re still placing orders. I think they accept it.” We aren’t the only ones raising prices. Everybody is doing it on the market. It is the new reality.

Husqvarna (the world’s largest maker of garden power equipment) also stated that prices were increasing this month due to rising supplies and added it didn’t have any indication that retailers would be slowing down.

Henric Anderson, the chief executive officer of the Swedish Group told Reuters following the earnings report that “they accept the price hikes.”