Nestlé reveals sales growth below expectations
Sales saw organic growth of 2.4% for the year ending December 31, following slow growth of 1.9% in the fourth quarter of the year. Total group sales were up 0.4% to £68.9bn.
Schneider said: "Our 2017 organic sales growth was within the guided range, but below our expectations, in particular due to weak sales development towards the end of the year.
“Sales growth in Europe and Asia was encouraging, while North America and Brazil continued to see a challenging environment.”
Sales growth to improve
Schneider expected organic sales growth to improve in 2018 and that Nestlé would be on track to meet its 2020 margin improvement target.
Profits for the company took the worst hit last year, with operating profit down 23% to £7.7bn compared with 2016.
Profit before taxes, associates and joint ventures dropped 24.2% to £7.28bn. Nestlé attributed the drop in profit to restructuring costs within the business.
Tightening purse strings
Commenting on the results, Martin Lane, analyst at Money.co.uk, said Nestlé’s lower-than-expected sales growth was a result of consumers tightening their purse strings and looking for a bargain wherever they could.
“In the UK, discount stores like Aldi are winning over loyalty from shoppers with their own-label goods. This means big brands like Nestlé could be feeling the pressure to be more competitive with their pricing, which may be one of the reasons their profits are lagging.
“Supermarkets in the UK are under pressure to ensure rising costs are not passed on to the consumer. I expect many food companies like Nestlé may be feeling the pinch this year as consumers expect more for their money.”
Meanwhile, last month, Nestlé sold its US confectionery arm – including well-known brands Crunch, Nerds and Butterfinger – to Ferrero, in a deal worth $2.8bn (£2.03bn).
