Nestlé profits jump despite slow growth

By Caroline SCOTT-THOMAS contact

- Last updated on GMT

Bulcke said he expected results for 2015 to be similar
Bulcke said he expected results for 2015 to be similar

Related tags: Organic growth, Asia, Business terms

Nestlé missed its growth estimate for 2014 and has forecast around 5% growth for 2015 – at the low end of its previous target of 5-6%.

Sales were down 0.6% for the full year to December 31, to CHF91.6bn (€85bn). However, profit jumped more than 43%, to CHF14.5bn (€13.44bn), boosted by its sale of shares in L’Oreal.

CEO Paul Bulcke said the results were “strong”.

“We expect 2015 to be similar to 2014 and we aim to achieve organic growth of around 5%,”​ he said.

Like other food companies, Nestlé has been struggling with weak consumer confidence around the world. Its North American frozen foods business has been particularly hard hit, as have developing markets, many of which have experienced slower economic growth.

CFO Wan Ling Martello said in an earnings conference on Thursday morning: “China has had some specific challenges.”

She added: “We had particularly weak performances in China and Oceania. There was also a slower performance with a high level of growth last year in the Middle East. We did however see good growth in many emerging markets. This includes the Philippines, South Asia, the Indo-China region, Turkey and Africa.”

The slowdown caused the company to miss its 5-6% organic growth target for the second year running, with organic growth of 4.5% in 2014.

Developed markets, which accounted for 56% of the company’s sales, delivered CHF51.4bn and 1.1% organic growth, while emerging markets (accounting for 44% of sales) delivered CHF40.2bn and 8.9% organic growth, down slightly on last year.

While European market weakness continues, Nestlé’s margins were up in the region, reaching 15.3%.

Martello said: “This reflected the zone’s ongoing efficiencies and a general reduction in structural costs.”

Full-year organic sales were up 5.4% in the Americas, 1.9% in Europe and 5.7% in Asia, Oceania and Africa.

Related topics: Business

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