Nestle misses market expectations as European sales fall

Alys Key
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Nestle said it has increased prices for most of its products (Source: Getty)

Nestlé saw organic growth across its businesses in the first half of the year, but still fell short of market expectations as European sales declined by 1bn Swiss Francs.

The consumer goods giant also increased prices across most sectors, especially in Nescafé.

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The figures

Organic growth was 2.3 per cent, but divestments and foreign exchange put total group sales at 43.02bn Swiss Francs, down more than 100m Francs on the same time last year.

Profit margins were down, despite an average pricing increase of 0.9 per cent across the group. Europe saw a particular increase, especially in Nescafé coffee.

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Why it's interesting

Nestlé had been expected by analysts to perform better during the period. Organic sales growth of 2.3 per cent missed consensus expectations of 3.1 per cent.

In Europe, reported sales declined by 10.3 per cent to 7.8bn Francs, wiping almost 1bn Francs off the total compared to last year.

But in China, the growth of food group Yinlu, in which Nestlé holds a 60 per cent stake, boosted sales. Organic growth for the Asia, Oceania and sub-Saharan Africa region was up for the fifth consecutive quarter at 4.8 per cent.

Yesterday Nestle said it would build a new factory in Japan owing to the popularity of novelty Kit Kat flavours.

What the company said

The company reiterated guidance for organic growth between two and four per cent, saying it would be in the lower half of the range.

Chief executive Mark Schneider said: "We are pleased with our value creation progress in the first half of 2017. This includes solid operational improvements as well as portfolio management choices and our decision to increase balance sheet efficiency."

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