Nestlé has posted disappointing full-year results, as the company’s net profit fell nearly 16% and organic sales growth fell below expectations to 2.4% following poor performances in the US and Brazil.
Net profit fell to CHF 7.18 billion ($7.7 billion) compared to the CHF 8.53 billion figure ($9.23 billion) recorded in 2016, and Nestlé claims the fall was mainly down to issues at its Nestlé Skin Health arm.
Overall net sales increased 0.4% to CHF 89.8 billion ($97.2 billion) from CHF 89.5 billion, ($96.9 billion) with net sales in its Americas zone growing 0.2% to CHF 28.5 billion, lower than in any other region.
Nestlé claimed the decelerated growth in the US was due to reduced consumer demand across its food and beverages ranges, and its confectionery range was the only segment in which growth was not “stagnant”.
Mark Schneider, Nestlé CEO said: “Our 2017 organic sales growth was within the guided range but below our expectations, in particular due to weak sales development towards the end of the year. Sales growth in Europe and Asia was encouraging while North America and Brazil continued to see a challenging environment.
“Our cost reduction initiatives delivered margin improvement ahead of 2017 expectations, in spite of considerable commodity price increases.
“During the past months, we have completed initial portfolio adjustments with very favourable results. We will continue this active portfolio management approach in a disciplined manner and fully in line with our strategy.
“Regarding our core portfolio, accelerating our growth through product innovation and renovation is high on the agenda.
“Organic sales growth is expected to improve in 2018 and we are firmly on track for our 2020 margin improvement target.”
Nestlé also stated that it would not increase its stake in L’Oréal and that it will end its current agreement with the Bettencourt family, which expires on 21 March 2018.
Dan Loeb, one of the company’s influential investors, urged Nestlé to consider its stake in the cosmetics company earlier this year, in order to focus more on food and nutrition.
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