Nestle forecasts 2015 Sales growth Near Low End of its Long Term Target

Nestle forecasts 2015 Sales growth Near Low End of its Long Term Target

Due to stagnant revenue in China, Nestle SA has witnessed the slowest annual sales growth in five years. Due to lower sales and pressure on margins, the world's biggest food products company has predicted 2015 sales growth near the low end of its long-term target.

In a statement issued on Thursday, the company stated that its revenue is expected to increase around 5% in 2015. It will be excluding acquisitions, disposals and currency shifts. For consecutive two years, the company reported its annual sales growth lower than the level of its long-term goal of average 5 to 6% annually.

Greater China region is considered to be the second biggest market for Nestle. Owing to a slowdown in product segments includingconfectionery, revenue in that market remained lower than expectations. Not only this, Nestle has been impacted by deflationary pressure in Europe and is working to bring significant changes around its frozen-food business in North America.

Patrik Lang, an analyst at Julius Baer Group Ltd. in Zurich, said that once more the growth is below is the long-term target, which makes them raise the question that whether the goal should not be reduced downwards.

Nestle also affirmed that it is aiming to improve margins and underlying earnings per share in constant currencies. Nestle said revenue in greater China was little changed at 6.64 billion francs. Also, sales growth in the Asia Oceania Africa region was 2.6%, in comparison 2013's 5.6%.

Another two factors that affected Nestle's business are political turmoil in Asia and Ebola outbreak in Africa. Andrew Wood, an analyst at Sanford C. Bernstein, stated the last year can be considered as a very solid year for Nestle in a tough environment.

Nestle said that it is making efforts to reposition its Lean Cuisine, Hot Pockets and Stouffer's meals by making them more organic and ethnic.


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