Nestlé reports slowest first-half sales growth since 2009

Maker of Nespresso coffee faces deflation across Europe as consumers pare spending

Nestlé is heading for a fourth consecutive year of missing its long-term target for average organic revenue growth of 5-6 per cent. Photograph: Valentin Flauraud/Reuters

Nestlé is heading for a fourth consecutive year of missing its long-term target for average organic revenue growth of 5-6 per cent. Photograph: Valentin Flauraud/Reuters

 

Nestlé reported the slowest first-half sales growth since 2009 as the world’s biggest food company struggled to raise prices.

Sales increased 3.5 per cent on an organic basis, the company, which is based in Vevey in Switzerland, said in a statement on Thursday. Analysts expected 3.7 per cent.

Nestlé reiterated that it expected full-year organic revenue growth to be similar to last year’s 4.2 per cent.

“We also expect pricing, which reached historically low levels in the first half, to recover somewhat in the coming months,” Nestlé chief executive officer Paul Bulcke said in the statement.

The maker of Nespresso coffee is facing spreading deflation across Europe as consumers pare spending.

Emerging markets

Chief financial officer François-Xavier Roger has said the company expected a better second half, boosted by more favorable comparisons and higher prices in some emerging markets such as Brazil and Russia.

In June, Nestlé appointed Fresenius’s Ulf Mark Schneider as successor to chief executive Paul Bulcke.

He’s joining next month and will take the chief executive role on January 1st. Mr Schneider’s background is in the medical industry, supporting Nestlé’s shift towards nutrition and health in a quest for faster growth.

Nestlé is heading for a fourth consecutive year of missing its long-term target for average organic revenue growth of 5-6 per cent.

Nestlé also repeated it aims to achieve improvements in margins and underlying earnings per share in constant currencies.

Unilever has reported second-quarter sales growth that beat estimates as it sold more deodorants and haircare products.

Growth remained steady with the first quarter, yet the gains came mostly from higher prices for its goods as sales volumes slowed.

Danone’s first-half earnings beat estimates as a revamp of Actimel and Danonino and higher-priced products offset lower-than-expected volume. – (Bloomberg)