Nestlé accelerates restructuring as sales stall

Swiss firm Nestlé is to accelerate its restructuring programme after reporting a drop in sales for the first nine months of 2017. Citing reduced net divestments of 2.6 per cent, which are mainly due to the creation of the Froneri joint venture, Nestlé recorded sales of CHF 65.3 billion (US$66.6bn), a decrease of 0.4 per cent.

Organic growth was 0.8 per cent in developed markets and 5.1 per cent in emerging markets, whilst organic growth increased to 2.6 per cent overall.

In terms of geographical regions, growth in the Americas remained subdued, with the likes of Brazil affected by the difficult trading environment. However, Mexico is said to have remained resilient and other parts of Latin America continued to deliver good growth.

Meanwhile, Europe, Middle East and North Africa saw a significant improvement in growth compared to the half year, with the coffee and petcare categories performing well.

Chief executive Mark Schneider said: “Our sales results for the nine-month period are in line with our expectations communicated in July. Organic sales growth continued to benefit from industry-leading volume growth, which illustrates our ability to innovate and meet consumer demand. Pricing remained soft. Zone AOA saw further improvement in organic growth. As expected, Western Europe returned to positive organic growth, with significant contributions from coffee and confectionery.

“Improving our efficiency is a key priority. We have identified further opportunities to accelerate our margin improvement, leading to a further increase in restructuring and related expenses in 2017. Consequently, we now expect our trading operating profit margin to decrease by 40-60 basis points. The development of our underlying trading operating profit margin is fully in line with our expectations for 2017.”