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Nestlé Cuts 2015 Forecast as Nine-Month Sales Miss Estimates

Nestlé, the world’s largest food company, reduced its sales forecast after nine-month revenue growth missed analysts’ estimates, hurt by a recall of Maggi noodles and weakness in China.

Sales will probably rise about 4.5 per cent on an organic basis in 2015, less than the company’s previous target of about 5 per cent, the Vevey, Switzerland-based maker of Nespresso coffee and Cailler chocolate said in a statement Friday. Nine-month revenue advanced 4.2 per cent on that basis, less than the median analyst estimate for a 4.7 per cent gain.

Nestlé is forecasting full-year sales growth will be below the company’s long-term average goal of 5 percent to 6 percent for a third consecutive year. The food company said the Chinese market is recovering slower than it expected. A nationwide recall of its Maggi noodles in India had resulted in a quarterly loss in that market for the first time in 15 years.

“With the market widely anticipating a beat, this release will come as quite a negative surprise,” Jeff Stent, an analyst at Exane BP Paribas, wrote in a note to investors.

“On the whole, organic growth fell short of our expectations,” Chief Executive Paul Bulcke said in the statement.

Unilever, the maker of Ben & Jerry’s ice cream, said Thursday full year-sales growth will be near the top end of its forecast after third-quarter revenue beat estimates on European ice-cream sales.

Nestlé also said its skin health unit took a one-time charge in the third quarter as it adjusted its prescription drug rebate policy in the U.S., taking a more “conservative” approach.

Nestlé’s definition of organic sales growth excludes acquisitions, divestments and currency shifts.

News by Bloomberg, edited by ESM. To subscribe to ESM: The European Supermarket Magazine, click here.

 

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