Nestle's shares fall after missing targets due to softening prices

 
Oliver Gill
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Nestle purchased the KitKat brand from York-based chocolatier Rowntree in 1988 (Source: Getty)

Nestle's share price fell by one per cent today after posting weak underlying sales and cutting its outlook for the rest of year.

While nine month revenues at the food giant increased by 3.3 per cent, the group downgraded its forecast growth for the rest of the year to 3.5 per cent, having previously advised investors of a 4.2 per cent increase.

Read more: Nestle warns of "even softer pricing" ahead

Like many competitors, the Nescafe owner has been battling with decreasing product prices as a result of stiff supermarket competition and soft commodity values.

Nevertheless, chief executive Paul Bulcke put a positive spin on things.

"In an environment marked by deflation and low raw material prices, we continued to privilege volume growth, resulting in real internal growth at the higher end of the industry in both emerging and developed markets. Pricing remained soft but [is] increasing," he said.

Read more: Nestle follow Adidas in severing ties with embattled IAAF

Total sales were SFr65.1bn (£58.1bn) and included a 1.7 per cent negative impact of adverse foreign currency translation. Sales growth was reduced by 0.6 per cent as a result of buying and selling companies and brands during the year.

Andrew Wood, an analyst at Bernstein, highlighted that Nestle had tried to "informally guide down expectations" for the third quarter but that "the sales results were a little disappointing and below expectations".

He added: "Nestle [has] missed consensus expectations for the eleventh time in the last 17 quarters (after beating them in 20 of the previous 22 quarters)."

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