Nestlé downbeat over sales

Weakness in North America led Nestlé to forecast only modest organic sales growth in 2018 after its slowest gain in at least two decades, giving fuel to investor Daniel Loeb’s campaign to overhaul strategy at the world’s biggest food group.

Nestlé said it would not increase its 23% stake in cosmetics company L’Oreal, but remained committed to it.

The company’s share price hit a 10-month low after it said organic growth, excluding acquisitions and currency moves, was only 2.4% in 2017, missing even the lowest estimate of 2.6% in a Reuters poll.

Bernstein analysts, who rate the stock as market perform, said 2017 was the sixth successive year of slowing growth.

Nestlé and rivals such as Unilever have been buying and selling brands and cutting costs to improve performance and regain the favour of health-conscious consumers who prefer fresh food and independent labels to packaged Maggi soups and Buitoni pizzas. Loeb’s hedge fund Third Point took a $3.5bn Nestlé stake in 2017 and has been pushing to speed up its transformation into a highergrowth, more efficient health food company.

Nestlé shares lost 2.6% on Thursday and are down about 8% so far in 2018. Nestlé organic sales growth slowed to 1.9% in the fourth quarter to December 31, well below the 2.85% estimate in the Reuters poll, hit by weakness in North America and Brazil, particularly in waters and nutrition.