Confectionery growth for Nestlé despite market challenges

Nestlé has reported 3.2% growth, with sales of CHF 89.5 billion ($89.5 billion) in its full-year financial results for 2016. Confectionery growth for Nestlé despite market challenges

Nestlé has reported 3.2% growth, with sales of CHF 89.5 billion ($89.5 billion) in its full-year financial results for 2016.

The company’s highest performing segments of the business were its powered and beverage divisions, along with its nutrition and health science sections.

Sales for its confectionery segment showed growth of CHF 8.6 billion, which showed year-on-year growth of 1.8% for the company.

As a result, the business has projected growth of between 2% and 4% for 2017, with stable growth in operating margins expected.

The company confirmed that it is to undertake further investment while making operating efficiencies to significantly reduce its structural cost by 2020.

In Latin America, its KitKat brand grew in double digits within Brazil, and growth was also reported in Mexico. 

However, there remained challenges for the business, reporting disappointing performance in the US due to strong competition and low overall market growth.

Mark Schneider, Nestlé CEO, said: "Our 2016 organic growth was at the high end of the industry but at the lower end of our expectations. We saw a solid trading operating profit margin improvement and our cash flow grew significantly. Based on these results, our Board of Directors is pleased to propose the 22nd consecutive dividend increase, underlining our commitment to continuity.

“In 2017, we expect organic growth between 2% and 4%. In order to drive future profitability, we plan to increase restructuring costs considerably in 2017. As a result, the trading operating profit margin in constant currency is expected to be stable. Underlying earnings per share in constant currency and capital efficiency are expected to increase.”

 

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