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Nestlé nine-month sales growth below full-year target

By Caroline Scott-Thomas+

17-Oct-2013

CEO Paul Bulcke said:
CEO Paul Bulcke said: "We see some colours coming back in many areas of the world despite some slowing down."

Nestlé organic sales growth slowed to 4.4% in the first nine months of the year, compared to 6.1% in the same period last year, hit by weaker demand from emerging markets and ongoing recession in Europe.

Sales at the world’s biggest food company rose to 68.4bn Swiss francs (€55.5bn), with most growth (8.8%) still coming from emerging markets, and 1.1% growth from developed markets.

In an investor conference on Thursday, CEO Paul Bulcke said that the company was still on target to hit ‘around 5%’ growth by the end of the year, a figure that Nestlé had revised downward three months ago from an earlier 5-6% growth target for the full year.

However, analysts surveyed by Reuters and Bloomberg had expected slightly higher sales growth of 4.5%.

Divestitures

Bulcke reiterated his view from earlier this month about the need for divestitures “when something doesn’t really fit with the Nestlé model and drags us down”. However, he refused to state which brands could be involved.

“The fact is, if we have to divest, it is not a matter of if, but a matter of when and how,” he said.

Emerging markets

Referring to slower growth in emerging markets, Bulcke said: “We see some colours coming back in many areas of the world despite some slowing down… When big economies are growing seven, eight per cent, then I want to be part of that. It also allows society to absorb that growth.”

He said high single-digit growth rates were far preferable to “15% one year and 2% another year”.

Ferrero speculation

Bulcke also said he would not comment on speculation that the company had submitted an offer to acquire Ferrero, as reported in the Italian newspaper La Repubblica on Thursday. However, Ferrero has denied any such offer and said it was not for sale.

Nestlé’s share price was up 2.66% in morning trading.

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