Nestle misses sales target for third year

London – Nestlé, the world’s largest food group, delivered a double dose of bad news to investors yesterday, with full-year sales that missed the Swiss company’s expectations and a warning that it was struggling to push through higher prices.

The maker of KitKat and Nespresso, which was hit by contamination fears over its Maggi noodles in India last year, said sales were up 4.2 percent at Sfr89bn (£63bn) in the year to the end of December.

That was at the bottom end of the range forecast in October and meant it missed its long-term target of 5 percent to 6 percent sales growth for the third year running.

Net profit was down by Sfr5.4bn to Sfr9.1bn, which the company said reflected the impact of selling part of its L’Oréal stake in 2014.

“It was a generally disappointing report – nothing better than average,” said analysts at Bernstein. “We are not accustomed to Nestlé being ‘average’ but it is becoming more frequent.”

Nestlé said its Asian business had been “seriously impacted” by the Maggi food scare, while economic turmoil in the region also took its toll.

But in China, the cause of much of the recent upset, there was “increased momentum towards the end of the year”.

By contrast, the company pointed to “exceptional performance” in western Europe and accelerating growth in the US.

Nestlé’s Swiss-listed shares sank 3.7 percent to Sfr71.35.

This was despite an increase in the dividend to Sfr2.25 per share.

 

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