On Tuesday, well known multinational company, Nestle, echoed the watchful 2012 tone of several other international food manufacturers. The company said it was banking on fresh markets and products to put it ahead of the field after it reported anticipated beating 2011 sales growth. Furthermore, Nestle, which produces some of the best food brands in the world including Perrier, Maggi and Nescafe, cautioned that this year would be as thorny as the last year due to continued economic worries and instability. In a statement, Paul Bulcke, the Chief Executive officer at Nestle said that 2012 will be a very challenging year.
He added that the global economy is currently passing thorough a very critical phase. Adding further, he said that the market is becoming more competitive as a result. For the last year, the underlying sales growth was nearly 7.5 percent, surpassing a consensus estimate for 7.1 percent. For 2012, after reporting a decline of approximately 0.2 percentage points in its underlying operating margin in 2011, the company also made its standard estimate for enhanced margin and basic EPS in constant currencies. In a note, Andrew Wood, Bernstein analyst said that despite falling short of the margin, overall market will respond well to the burly sales results and optimistic economic outlook on 2012. Reports revealed that Nestle’s shares increased by nearly 1.1 percent to 55.05 francs. Compared to this, a slight increase of 0.3 percent was reported in European food and drinks sector. Nestle managed a 3.7 percent underlying sales growth in Portugal, Greece, Spain and Italy. It also recorded a large increase in margins in Europe as it introduced latest products including Maggi spice filled roasting bags and Gusto Coffee.
Jim Singh, Nestle’s CFO said that company’s new innovations are its key to progress in Europe. An analyst working at JP Morgan, Polly Barclays said that given its relative flexibility in Europe, Nestle should trade at a premium. On the other hand, on Wednesday, Nestlé’s French food rival DANONE slashed its sales growth forecast for the year.
