Weaker quarter prompts Nestlé to lower turnover forecast

Swiss food giant Nestlé managed a slightly higher turnover in the first 9 months of 2016, but nevertheless, the company will lower its full-year forecast because of the slower growth pace.

Slowest growth in a decade

Over the first 9 months of 2016, Nestlé’s turnover grew 1 % year-on-year to 65.5 billion Swiss francs, some 60 billion euro. Autonomous growth reached 3.3 % while exchange rate fluctuations negatively impacted sales 1.7 %, it says.

There was still growth in each and every geographical region: autonomous turnover growth in North and South America reached 4.8 %, 2.1 % in Europe, Africa and the Middle East, while the rest of the world (Asia, Oceania and the sub-Saharan Africa) managed 2.5 %, actually the slowest growth numbers in more than a decade. 

The explanation is easy to find: there is a price war going on in Europe, while growth regions like China and Brazil are slumping. “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”, resigning CEO Paul Bulcke explained.

Nestlé has also immediately lowered its full-year forecast, to a 3.5 % autonomous growth, down from 4.2 % in a previous forecast.