* Full-year net profit 10.0 bln Sfr vs 10.7 bln in poll
* Organic sales growth 4.6 pct vs 4.65 pct in poll
* Aims for around 5 pct sales growth in 2014
* To pay dividend of 2.15 Sfr per share
By Silke Koltrowitz
VEVEY, Switzerland, Feb 13 Nestle
expects another challenging year that could see it undershoot
its long-term targets again, after pressure on prices in Europe
and weaker emerging market demand slowed sales growth to 4.6
percent in 2013.
Food companies face slacker sales both in emerging markets,
where economies are losing steam, and in austerity-hit Europe
where consumers are tightening their belts.
Chief Executive Paul Bulcke said the European market was not
getting better and voiced concern that the region could enter a
"deflationary spiral". He said America was not bouncing back as
quickly as it did in the past.
"The emerging markets are growing more slowly. I think they
are getting to a pace that is possible to maintain. We see some
headwinds in Latin America and Asia," he said at the group's
annual results conference.
Nestle experienced a slowdown in organic sales growth, which
strips out the effects of currency swings and acquisitions, to
4.6 percent in 2013 from 5.9 percent a year earlier.
The world's biggest food group said that, as in 2013, it was
targeting "around 5 percent" organic sales growth this year,
below its long-term goal of 5-6 percent.
Bernstein analyst Andrew Wood said the guidance was fairly
cautious. "But this is still reasonable in a tough market
environment," he said, adding that Nestle's rivals had given
Some analysts said Nestle's forecasts were unimpressive.
Helvea's Andreas von Arx said investors might shift their
interest to Nestle peers such as Unilever and possibly
Shares in Nestle, which had risen almost 3 percent this
year, were down 1.8 percent at 1117 GMT, lagging a 1 percent
fall in a European food sector index.
They are trading at about 18.9 times forward earnings - a
premium to Danone at 17.4 times and Unilever at 17.2.
"While today's results may disappoint some investors, we
continue to view Nestle as an attractive investment in the
current challenging environment," Bank of America Merrill Lynch
analysts said, adding Nestle remained their top pick in food.
They said they saw scope for earnings upgrades during 2014.
JP Morgan also continues to favour Nestle among European
big-cap food companies.
The maker of KitKat chocolate bars, Nespresso portioned
coffee and Buitoni pasta held out the prospect of a further
improvement in margins this year after its trading operating
margin improved by 20 basis points to 15.2 percent last year.
Nestle said on Tuesday it was selling an 8 percent stake in
L'Oreal to the cosmetics group and would use cash
proceeds of 3.4 billion euros for a share buyback. Chief
Financial Officer Wan Ling Martello said details would be
communicated when the deal closes, probably before July.
It said it was committed to its remaining 23 percent stake
Food groups started to feel the pinch from slower emerging
market demand towards the end of 2012 but signs of a recovery
have accumulated in recent months.
Lipton tea maker Unilever said last month it would stick to
its growth strategy for emerging markets after quarterly sales
growth there accelerated to 8.4 percent.
Danone said on Wednesday it was raising its stake in China's
top dairy firm to tap into booming local demand. The yogurt
maker will post results on Feb. 20.
Sales at Swiss-based Nestle rose to 92.2 billion francs,
lagging a forecast of 93.1 billion francs in a Reuters poll of
Sales growth in emerging markets, which accounted for 44
percent of group sales, stood at 9.3 percent last year, an
acceleration from 8.8 percent in first nine months.
In Europe, prices of Nestle products continued to fall,
eclipsing volume growth, and the deflationary environment is
likely to continue this year, Martello said.
Bulcke said that, overall, price increases might make a
bigger contribution to Nestle's growth rate this year.
Vontobel analyst Jean-Philippe Bertschy said Nestle's
proposed dividend of 2.15 francs per share, up 5 percent versus
last year, was disappointing given an 11 percent increase in
underlying earnings per share.
Nestle's net profit fell slightly to 10.02 billion Swiss
francs ($11.12 billion), short of a 10.69 billion franc forecast
in a Reuters poll of analysts, due to the costs of portfolio
restructuring and a negative currency impact.
The company, which also makes Maggi soups and Perrier
mineral water, has said it wants to get rid of underperforming
brands and already sold the bulk of its Jenny Craig weight
management activities and the PowerBar sports nutrition brand.