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
Carlsberg has announced the departure of its chief financial officer (CFO), Heine Dalsgaard, after six years in the position. In a statement, Carlsberg said that Dalsgaard was resigning from the post to take up the role of CFO at a private equity-backed company in a different industry.
Kellogg will split into three independent companies to focus on the snack business, Reuters reported Tuesday. The snacking portfolio will comprise the main business, while the North America cereal unit and the plant-based business will be spun off. The company is also considering a sale of the plant-based business.
The snacks giant says the acquisition will help build on its commitment to “lead the future of snacking” in key geographies worldwide. Once the transaction is completed, Mondelēz will continue to operate the Clif Bar business from its headquarters in Emeryville, California. The snack giant will also continue to manufacture Clif Bars’ products, which include Clif Bar, Luna and Clif Kid, at its facilities in Idaho and Indiana.