Nestle blames weak emerging markets for slowdown in sales

VEVEY( SWITZERLAND): Nestle said still-weak emerging market demand and falling prices for its products in Europe slowed underlying sales growth to 4.4 percent in the first nine months of the year from 6.1 percent in the year-ago period.

Sales at the world's biggest food group rose to 68.4 billion Swiss francs ($74.68 billion), lagging a 69.3 billion francs estimate in a Reuters poll.

Analysts had expected underlying sales growth to accelerate to 4.5 percent from 4.1 percent in the first half.

Nestle and peers Danone and Unilever are grappling with sluggish consumer demand in austerity-hit Europe and a marked slowdown in many emerging markets, where double-digit growth rates seem to be a distant memory.

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[caption id="attachment_630836" align="alignleft" width="380"] Analysts had expected underlying sales growth to accelerate to 4.5 percent from 4.1 percent in the first half. AFP[/caption]

Nestle's sales growth in Asia, Oceania and Africa accelerated slightly to 6.9 percent from 6.3 percent in the first half, while growth in Europe rose to 0.9 per cent from 0.6 per cent in the first half with still negative pricing.

"We expect our continued growth momentum to enable us to deliver around 5 percent organic growth for the full year," the maker of KitKat chocolate bars and Maggi soups said in a statement on Thursday.

It had cut its long-term 5-6 per cent goal in August and warned at the time that even the lowered guidance would be tough to reach.

Historically best-in-class, Nestle has disappointed markets for several quarters with poor performances.

Danone and Unilever, which have fared better thanks to their greater exposures to baby food and cosmetics, are now also feeling the pinch.

Unilever said last month a further slowdown in emerging markets meant underlying sales growth would be 3-3.5 percent in the third quarter, while Danone on Wednesday cut its full-year growth target to 4.5-5 percent in the wake of product recalls and a bribery scandal in China. Unilever publishes third-quarter results on October 24.

Reuters