Nestlé has downgraded its growth target for 2017 in the face of a slowdown in Western markets during the second half of 2016.
The world’s biggest food and drink company saw net profit slide from CHF 9.1bn (£7.3bn) in 2015, to CHF 8.5bn (£6.8bn) last year, while organic growth fell from 4.2% to 3.2%, according to full-year accounts published today.
The UK had faced “a particularly challenging year with both volume and pricing declining slightly”, it added.
Global organic growth was at the “higher end of the industry”, said recently appointed Nestlé CEO Mark Schneider. However, he told a press conference at the group’s HQ in Vevey, Switzerland “there is no beating around the bush; it was at the lower end of our expectations”.
The fmcg giant’s pace of growth stood at its slowest rate since 1996, reported the Financial Times.
Schneider said Nestlé was aiming for between 2% to 4% organic growth this year, a marked departure to the so-called ‘Nestlé way’, which targets 5% to 6% of organic growth a year.
Nestlé reported an increase in global volumes of 2.4% for 2016. However, the impact of currency fluctuations pulled reported revenues down to just 0.8% higher than a year ago at CHF 89.5bn (£71.5bn), while it also struggled to push through price rises in many markets, with overall prices up just 0.8%.
However, it said further price increases were expected to be pushed through in 2017, following recent moves in the UK, parts of Western Europe, Mexico and the Philippines.
For 2017, Schneider reaffirmed Nestlé’s commitment to improving its nutritional credentials and a reduction in salt and sugar contents across its portfolio. The company would also seek to build on its “leadership position in coffee”, particularly out-of-home, he said.
Nestlé also planned to ramp up efficiency programmes this year, with some CHF 500m (£400m) set aside for restructuring costs, up from CHF 300m (£240m) last year. The business had also enjoyed significant progress online, Schneider added, with digital sales increasing from just under 3% of its total revenues in 2012 to about 5% last year. “We were a little late to the party, but you will see a lot more emphasis on this area,” he said.
Elsewhere, Nespresso continued to grow in its 30th year, with the US and Canada seeing strong momentum from the continued success of its VertuoLine coffee makers, Schneider added. Sales in France also benefited from the launch of the VertuoLine at the end of 2016, while the UK saw strong sales acceleration following brand investment and the launch of a new subscription model.
No comments yet