Low prices force Nestlé's slowest sales since 2009

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Kit Kat and Shreddies maker Nestlé today reported its slowest sales growth since 2009 as prices fell to “historically low levels” in the first half of the year.

The world’s largest food company fell short of expectations as sales rose just 3.5% to Swfr43.2 billion (£34.4 billion). 

Nestlé, which also produces Quality Street and Nesquik, has set a long-term target for growth of between 5% and 6%, but has conceded this year’s number will be in line with last year’s 4.2%.

Boss Paul Buckle highlighted “challenges in China” and deflationary pressures but forecast a rebound. “We also expect pricing, which reached historically low levels in the first half, to recover somewhat in the coming months.”

Investors were impressed by an improvement in margin on the back of “premiumisation”, cost discipline and input cost “tailwinds”. The shares rose  45 cents to Swfr78.80.

Liberum said: “Management is tackling under-performing assets, improving product mix and raising exposure to structural growth categories and regions, which may lead to upside surprise although current progress is slow.”

Nestlé also said it had returned to growth in India after relaunching Maggi noodles after a high-profile safety scare.

Source Article from http://www.standard.co.uk/business/low-prices-force-nestl-s-slowest-sales-since-2009-a3323961.html

August 18, 2016 |
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