Nestlé Forecasts Higher 2012 Earnings After Sales Beat Analysts’ Estimates

Nestlé Forecasts Higher 2012 Earnings After Sales Beat Analysts’ Estimates

FMCG SUPPLIER NEWS

Bloomberg - Feb 16th, 09:42

Nestle SA (NESN), the world’s biggest food company, reported 2011 sales growth that beat analysts’ estimates and forecast higher 2012 earnings as it introduces products such as the Nescafe Alegria coffee maker. 

Sales rose 7.5 percent excluding acquisitions, disposals and currency shifts, the Vevey, Switzerland-based company said today in a statement. That beat the 7 percent average estimate of 12 analysts surveyed by Bloomberg. Nestle forecast a gain in 2012 “underlying” earnings per share at constant currencies.

Nestle has developed Maggi Juicy Roasting cooking aids and Dreyer’s smoothies to counter weakening consumer sentiment in North America and Europe. The company has also passed on higher raw-material costs to consumers in the form of increased prices. Sales from its Americas unit gained 6.2 percent, helped by the introduction of products such as DiGiorno Pizza Combos.

“The figures look better than expected and there seems to be an acceleration in the Americas in the fourth quarter, which is a positive and indicative of improved consumer mood,” said Jon Cox, head of Swiss research at Kepler Capital Markets in Zurich.

Net income from continuing operations rose to 9.49 billion francs from 8.78 billion a year, tempered by a strong franc, which reduced the value of sales generated in other currencies.

Forecast Maintained

Nestle said it expects so-called organic sales growth in 2012 to meet its target of 5 percent to 6 percent after beating that range in 2010 and 2011. The maker of KitKat chocolate bars also aims to widen its so-called trading operating profit margin and to boost underlying earnings per share at constant currencies.

“It was a challenging year, and we do not expect 2012 to be any easier,” Chief Executive Officer Paul Bulcke said in the statement.

The weakness of currencies against the franc stripped 13 percentage points off sales growth, Nestle said. The dollar was on average 15 percent lower against the franc last year, while the euro was down 11 percent.

The food company last week unveiled the Alegria coffee machine, which is designed for small businesses such as hairdressers and florists. Nestle has developed a range of beverage systems including the Viaggi super-premium coffeemaker and Special.T tea machines to tap demand for drinks. Sales of Nespresso rose more than 20 percent in 2011.

Pepsi, Danone

PepsiCo Inc. (PEP), the maker of Frito-Lay chips and Quaker oats, said last week profit will decline about 5 percent this year on a constant-currency basis as it cuts 8,700 jobs and boosts marketing spending. Danone (BN), the world’s largest yogurt maker, yesterday forecast like-for-like sales to rise 5 percent to 7 percent in 2012 and said European consumer sentiment won’t improve.

Nestle proposed a dividend of 1.95 francs a share, 5.4 percent more than last year.

The Lean Cuisine meal maker said in August it would stop buying back more shares after repurchasing 35 billion francs worth since 2007. The company has said it would invest in its own business, while also seeking “bolt-on” acquisition opportunities.

Nestle and Danone made first-round bids for Pfizer Inc.’s baby-formula unit, which may fetch as much as $10.5 billion, people with knowledge of the process said last month. Pfizer said in July it would examine options for the unit and last month said it hadn’t yet reached a conclusion