Nestle slashes sales forecast after weak growth
VEVEY (SWITZERLAND): Nestle became the latest company to be hit by the global slowdown affecting food manufacturers after posting its weakest underlying sales growth in more than a decade.
The Swiss food giant yesterday cut its outlook for the year, saying it now expected its full-year sales to rise by 3.5 per cent after posting an increase of 3.3 per cent for the first nine months. It previously said it expected full-year organic sales to rise by 4.2 per cent.
Its shares were indicated 1.7 percent lower in pre-market activity.
Like other food manufacturers, the maker of KitKat chocolate bars and Nescafe soluble coffee has been struggling with price deflation for its products in Europe amid fierce competition among supermarkets and weak commodity prices.
Tough conditions have also persisted in key markets like China and Brazil.
Rivals like Unilever have increased prices to compensate for currency weaknesses in some markets like Britain.
Nestle said it continued to prioritise volume increases in what it described as a soft environment, but saw some improvement in pricing.
“In an environment marked by deflation and low raw material prices, we continued to privilege volume growth,” said chief executive Paul Bulcke. “Pricing remained soft but increasing.”
Nestle’s nine-month sales rose to Sfr65.51 billion (RM276.6 billion) from Sfr64.86 billion a year earlier, said Vevey-based Nestle. The figure lagged the average analyst estimate of Sfr66.00 billion in a poll.
Analysts polled by Reuters had on average expected organic growth — which strips out the impact of acquisitions and currency swings — of 3.7 per cent. Reuters Nestle expects its after posting an increase of 3.3 per cent for the first nine months. Reuters pic