Disappointing growth in 2017 for Nestlé

Nestlé published a disappointing 0.4 % growth for 2017, failing to live up to analysts’ expectations. 

“Below expectations”

There was a 89.9 billion Swiss francs turnover (nearly 78 billion euro) and 2.4 % organic growth for Nestlé in 2017, which was below the 2.6 % forecast. A third of that organic growth came on the back of price increases.

That meagre result also impacted the Swiss company’s profit, because that dropped 15.8 % from 9.62 to 7.2 billion francs (6.2 billion euro). “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”, CEO Mark Schneider said.

It did manage 0.9 % organic growth in North and South America, including 0.7 % from higher prices. There was a minor drop in North America and Brazil is still tumultuous, which obviously reflects in the prices. The Europe, Middle East, North Africa region posted a 2.3 % organic growth, including 0.6 % from higher prices. Each separate sub-region performed well here. Strongest growth was achieved in Asia, Oceania and the rest of Africa, with a 4.7 % organic growth, including 1.8 % from higher prices.

Sale of L’Oréal stake?

Nestlé says it is not focused on expanding its stake in L’Oréal: it has decided not to update a shareholder agreement with the French cosmetics company.

The French company recently said it wanted to acquire the shares should Nestlé decide to sell. It currently has a 23 % stake, worth 23 billion euro, and a sale would fit investor Daniel Loeb’s agenda, because he has clamoured for a while that Nestlé should focus entirely on food.