Food group Nestle missed forecasts with a 4.2 percent rise in annual underlying sales and predicted only a similar outcome this year, saying it was getting harder to raise prices in a tough economic environment. It was the third successive year that the maker of Nescafe coffee and Kitkat bars fell short of its long-term target of 5-6 percent growth, disappointing investors who still look to the Swiss giant to outperform rivals thanks to its broad reach and efficient management.
"It was a generally disappointing report, nothing better than average," said Bernstein analysts in a note. "We are not accustomed to Nestle being 'average' but it is becoming more frequent." Analysts had been expecting full-year sales growth of 4.3 percent, according to a Reuters poll. Nestle shares were down 3 percent at 71.90 Swiss francs at 1140 GMT.
All consumer goods companies are facing slower growth around the world and more demanding consumers in emerging markets, notably China. Nestle did forecast improvements in margins, underlying earnings per share in constant currencies, and capital efficiency. Its net profit fell more than expected last year, by over a third, to 9.1 billion Swiss francs ($9.2 billion), partly due to a one-off gain in 2014. Nestle raised its dividend as expected to 2.25 francs per share, but did not propose a new share buyback programme, as some analysts had hoped. Kepler Cheuvreux analyst Jon Cox said the disappointing outlook and absence of a share buyback announcement, would weigh on the stock.
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