Slower growth in new markets knocks Nestle

City A.M. Reporter
NESTLE, the world’s biggest food company, sees no respite this year from a tough trading environment after sales growth undershot rival Unilever last year as emerging markets like Asia slowed.

Nestle’s 2012 underlying sales grew 5.9 per cent last year to SFr92.2bn (£64.6bn), the firm said yesterday.

The figure is in line with a consensus analyst forecast and implies a slight recovery after third-quarter growth of some five per cent.

It said it still saw double-digit sales growth in Africa, China, the Middle East and Indonesia, helped by strong demand for products like its Milo chocolate milk and Maggi stock cubes.

The Swiss firm is trying to keep earnings growing in a flagging global economy by focusing on its most profitable food businesses such as formula milk and premium coffee Nespresso.

But its focus on emerging markets has made the maker of KitKat chocolate bars and Maggi soup sensitive to any slackening of demand in those faster-growing regions.

Its expansion in emerging markets, which make up 43 per cent of sales, slowed last year to 11 per cent from 13.3 per cent in 2011.

Chief financial officer Wan Ling Martello said there had been fewer of the one-off events such as typhoons in the Philippines and social unrest in Egypt that hit sales in the quarter.

Nestle, which sold the rights to the Findus brand in most of Europe in 2000 but retained them in Switzerland, launched a campaign this week to reassure consumers that Swiss Findus products were only made from Swiss beef.

“Everything under our labels is not affected,” chief executive Paul Bulcke told a news conference.