Nestle expects pick up in sales growth to be maintained

Vevey: Nestle said it expected its organic sales to rise by more than 3 percent this year after an improving performance in China and North America helped growth accelerate in 2018 after six years of slowdowns.

Demand for packaged foods has suffered from a trend towards healthier eating, and Nestle Chief Executive Mark Schneider is trying to bring the world’s biggest food group back up to speed by improving efficiency and focusing on growth categories.

Organic sales grew 3.0 percent in the full year, accelerating to 3.7 percent in the final quarter, the maker of Kitkat chocolate bars and Nespresso portioned coffee said in a statement on Thursday.

The improvement meant Nestle beat forecasts for 3.5 percent quarterly growth in a Reuters poll and was also better than the 2.9 percent growth reported by peer Unilever last month.

Nestle’s net profit jumped 42 percent to 10.1 billion Swiss francs ($10.02 billion) thanks to one-off items like the divestment of its U.S. confectionery business, lagging a forecast for 11.5 billion francs in a Reuters poll.

The Swiss company also said it would explore strategic options for its Herta cold cuts and meat-based products business, although it will hang on to the Herta brand dough and vegetarian business.

The sale is part of Nestle reshaping its business to adapt to changing consumer tastes and focus on coffee, petcare, infant nutrition and bottled water as its main growth categories.

It has sold underperforming units — it is currently looking for a buyer for its skin health unit and expected its review of the business sale to be completed by mid-2019.

It also wants to return to mid-single digit sales growth and reach an underlying trading operating profit margin target of 17.5-18.5 percent by 2020.