Nestlé SA said a key sales measure weakened in the first nine months of the year and that it doesn’t expect an improvement in the final quarter, underscoring the pressure it faces to boost profit, including from activist investor Daniel Loeb.
The Swiss consumer giant said Thursday it struggled in its largest market, the U.S., where it is trying to sell its confectionery business. Elsewhere, its ability to raise prices was limited by weaker currencies in some emerging markets.
Organic growth, which strips out the effects of currency changes, acquisitions and divestments, came in at just 2.6% through September. Nestlé said that full-year underlying growth will match that nine-month rate, which would be below last year’s pace of 3.2%.
Total sales were 65.3 billion Swiss francs ($66.5 billion) in the nine months through September, down 0.4% from the year-ago period.
The results are the latest in a string of disappointing figures from Nestle, which missed a longstanding target of 5% to 6% organic growth for four-straight years through 2016 before ditching the goal earlier this year.
Like other consumer-goods companies, Nestle has struggled with a mix of weaker growth in the world economy and ageing populations that have coincided with changing consumer tastes toward locally growth, organic food and away from mass-produced prepared meals that have long been a Nestle staple.
Nestle signaled a new way of thinking about its business when it brought in health-care executive Mark Schneider as chief executive in January. He was the first CEO chosen from outside Nestle’s ranks in nearly a century. Four months after dropping the sales target, Nestle put its U.S. confectionery business — which sells Butterfinger and Crunch bars — up for sale and said Thursday that process should be completed by the end of the year.
But Mr. Schneider has faced investor pressure to deliver results quickly. In June, Mr. Loeb’s Third Point LLC said it had taken a 1.25% stake in Nestlé and pressed for changes, including the sale of noncore assets such as Nestlé’s stake in L’Oréal.
The announcement set up an active summer for Nestle. In late June, it announced a 20 billion franc ($20.4 billion) share-buyback program and said it would orient its capital spending toward high-growth parts of its business, including pet care, infant nutrition, coffee and bottled water. Last month it said it would accelerate the buybacks and adopted a formal profit-margin target.
In between, it made relatively small-scale U.S. acquisitions in fast-growing sectors with the purchases of plant-based food maker Earth Foods and a majority stake in premium coffee chain Blue Bottle.
Nestle said it expects to spend roughly one billion francs in restructuring costs this year.
By Brian Blackstone
Currently chief executive of GreenV – an international group of companies active in the horticultural sector – van Karnebeek spent a large portion of his career at Heineken, working in commercial, marketing and general management positions. He served as chief commercial officer at the Dutch brewer from 2015 until 2021.
The facility combines the existing Kerry office in Barcelona with a new customer suite and application labs. It will enable the company to work more closely with its customers in Southern Europe to develop food and beverage solutions.
The sweet and culinary flavor creation labs are the latest addition to the company’s expansive campus that has been in operation since 1964, spanning more than 312,150 square feet in Brabrand, Denmark. The innovation hub is home to more than 400 employees engaged in research, application development, ingredient and flavor creation.