Nestle SA, the world’s biggest food company, forecast 2015 sales growth near the low end of its long-term target after reporting the slowest annual sales growth in five years, hit by stagnant revenue in China.
Revenue will increase “around” five per cent in 2015, excluding acquisitions, disposals and currency shifts, the Vevey, Switzerland-based maker of Nespresso coffee and Maggi bouillon cubes said in a statement Thursday. Sales on that basis gained 4.5 per cent in 2014, matching the median estimate in a Bloomberg News survey.
For two years in a row, Nestle has reported annual sales growth below the level of its long-term goal of average five per cent to six per cent annually. Revenue in the Greater China region, Nestle’s second-largest market, was little changed due to a slowdown in products such as confectionery.
The Swiss maker of Stouffer’s convenience meals has also been struggling with deflationary pressure in Europe and is trying to turn around its frozen-food business in North America.
“With organic growth again below the long-term target, it raises the question whether the goal should not be corrected downwards,” said Patrik Lang, an analyst at Julius Baer Group Ltd. in Zurich. “But it’s still clearly better than what we’re seeing the rest of the sector, which is why investors will still be happy.”
Nestle also said it aims to achieve improvements in margins and underlying earnings per share in constant currencies. The stock traded 0.4 per cent higher at 71.35 francs as of 9:05 a.m. in Zurich, giving a market value of 230 billion francs ($244 billion).
Bllomberg News, Edited by ESM
