February 16, 2012 / 7:45 AM / 6 years ago

UPDATE 2-Nestle posts strong Q4 sales, cautious on 2012

* Full year underlying sales growth 7.5 pct vs 7.1 pct in poll

* Nestle forecasts 5-6 pct growth, margin rise for 2012

* Expects 2012 to be no easier than 2011

* Proposes 2011 dividend of 1.95 Sfr

* Questions surround L‘Oreal stake, bid for Pfizer’s Wyeth

By Emma Thomasson

VEVEY, Switzerland, Feb 16 (Reuters) - Nestle echoed the cautious 2012 tone of other global food manufacturers on Thursday after reporting forecast-beating sales growth in the last three months of last year.

The world’s largest food group which makes brands such as Nescafe, Perrier, Maggi and Carnation warned that it did not expect 2012 to be any easier than previous years due to continued economic uncertainties and volatility.

“It was a challenging year, and we do not expect 2012 to be any easier,” Chief Executive Paul Bulcke said in a statement

Underlying sales growth for 2011 was 7.5 percent, beating an consensus forecast for 7.1 percent and rising from 7.3 percent in the first nine months, as it forecast underlying growth returning to its long term range 5-6 percent.

After reporting a 60 basis point increase in margins to 15 percent for 2011, the world’s biggest food group also made its standard forecast for “improved margin and underlying earnings per share in constant currencies” for 2012.

Bernstein analyst Andrew Wood said that the 2011 margin on underlying earnings before interest was the main disappointment as it showed a small decline .

“ Overall we believe the market will react well to the strong sales results and positive outlook on 2012, despite the margin miss. However, we remain cautious on sales momentum entering 2012 ,” he said in a note.

Nestle shares, which are up barely 1 percent this year, were indicated to rise after the results.

The group reported that absolute 2011 sales fell slightly less than expected to 83.6 billion Swiss francs ($90.5 billion), as the rise in the safe-haven currency more than cancelled out underlying growth.

French food rival Danone trimmed its sales growth and margin targets for 2012 on Wednesday, saying tough west European markets would offset strong growth in emerging markets, which now account for more than half of sales.

Anglo-Dutch consumer goods group Unilever sounded a similar tone, saying 2012 will be a difficult year as growth in emerging markets slows and demand in Europe and North America stays flat at best.

Investors will also be looking for any news on Nestle’s bid to buy Pfizer’s $10 billion Wyeth infant nutrition business in a an attempt to boost its Chinese business.

Nestle is seen as a front-runner alongside French rival Danone, according to banking sources, although both have been silent on the issue, declining even to acknowledge they are in the auction process.

Executives will also be asked on Thursday about Nestle’s 31 percent stake in French cosmetics maker L‘Oreal which said this week that heiress Liliane Bettencourt, 89, with a 30 percent stake in the 49 billion-euro company, was leaving the board to be replaced by her grandson Jean-Victor Meyers.

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