The world’s largest food producer, Nestlé, saw its UK revenues slide in 2016 after a “challenging year” according to newly filed accounts.
The UK arm reported a 3.2% slide in headline sales in the year to 31 December to £1.53bn from £1.58bn over the previous 12 months.
This led to a 3.9% drop in operating profits to £151.3m. However, the unit’s headline profits were boosted by inter-company revenues worth £175m, taking pre-tax profits up by more than 140% to £273.5m. Nestlé declined to comment on the specifics of UK performance, with a spokesman saying only: “The grocery market remained very tough in 2016. Nestlé in the UK has dealt with those challenges and continued to deliver a strong overall performance across the market.”
The Swiss group’s annual report admitted 2016 had been a “particularly challenging year” that had seen declines in both sales volumes and pricing
While Nestlé’s traditional UK brand portfolio, including Kit Kat and Nescafé, is under pressure, other areas were in growth. Nespresso UK sales rose 14.1% last year to £169.7m while pre-tax profits rose 20.6% to £7.2m. Nestlé Waters UK sales grew 12.4% to £129.3m and pre-tax profits jumped 72% to £11.5m. However, its UK Cereal Partners joint venture with General Mills saw sales drop 1.7% to £255.8m and pre-tax profits fall 13.2% to £14.9m.
The UK results come as the wider Nestlé Group is under pressure to step up its returns to shareholders. This week Nestlé bowed to market pressure to prioritise bottom-line growth by publicly stating operating profit margin targets for the first time in addition to its long-standing organic growth targets.
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