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Why Nestle's sales aren't so sweet

Thursday, February 18, 2016 - 01:40

Food group Nestle misses forecasts with a 4.2 percent rise in annual underlying sales and predicts a similar outcome this year. As Hayley Platt reports it says it's getting harder to raise prices in a tough economic backdrop.

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Its chocolates may be tasty But Nestle's profits in 2015 weren't so good. They fell by more than a third to $9.2 billion. The world's biggest food group also missed forecasts with a 4.2 percent rise in annual underlying sales. It said the economic environment meant it had to keep price rises low. CCLA's James Bevan. (SOUNDBITE) (English) CCLA, CHIEF INVESTMENT OFFICER, JAMES BEVAN, SAYING: "The margin reduction is really down to three factors, first off there has been a significant challenge in terms of rebates on its health division, secondly there has been the strength of the swiss franc and thirdly there has been a very strong global competitive position from companies within the consumer staples market." The slowdown in China and other emerging economies has hurt Nestle. And sales in India took a hit after it was forced to pull its Maggi noodles from shelves over a health scare. (SOUNDBITE) (English) CCLA, CHIEF INVESTMENT OFFICER, JAMES BEVAN, SAYING: "The emerging markets slowdown is clearly a significant factor that is constraining Nestle's growth but it is not the case to assume that Nestle is unable to deliver long term earnings growth that has allowed it to become the darling of growth investors for an extended period." The group behind Nescafe instant coffee and Kitkat chocolate bars has been slow to adjust to changing consumer demands in China. But it's now reworking some recipes to appeal to more health-conscious consumers. It's also beefing up its e-commerce offering. But shares fell almost three percent. Its long-term target of 5-6 percent growth remains elusive. It's expecting this year to be similar to last.

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Why Nestle's sales aren't so sweet

Thursday, February 18, 2016 - 01:40