Nestle cuts full-year outlook after 9-month sales miss
Food giant Nestle today lowered its full-year outlook as a Maggi noodle scandal continued to drag down third-quarter sales.
The world’s largest packaged food company’s sales dropped 2.1% to 64.9 billion Swiss francs in the nine months to September, missing analysts’ forecast of 65.9 billion francs in a Reuters poll.
“After a good performance in the first half of the year we were impacted in the third quarter by exceptional events, with Maggi noodles in India and a rebate adjustment in Nestle Skin Health,” chief executive Paul Bulcke said.
Underlying “organic” growth – adjusted for currency swings, acquisitions and divestitures – slowed to 4.2% in the first nine months from 4.5% in the half-year.
This meant it fell further behind the company’s 5% organic growth target for 2015.
The company cut its 2015 outlook to around 4.5%, below its long-term model calling for 5-6% growth. In the US, chilled frozen food sales began warming after a major revamp of Nestle’s Lean Cuisine brand.
But this was contrasted with lagging sales in China, which were showing slower sales recovery, Bulcke said.
India’s Maggi noodle recall continued to have a significant impact on growth in the South Asia Region, Nestle said.
In its Skin Health division, Nestle’s USprescription drug rebates exceeded the amount of money that was set aside for this purpose. This resulted in an additional one-off charge in the third quarter, it said.
