The world’s largest packaged foods manufacturer, Nestlé forecast sales to rise five percent this year (2015), in line with its long-term goals, following a weaker year in 2014 that was damaged by deflation in Europe and slowing demand in Asia.
The Switzerland-based maker of Nescafé coffee and KitKat chocolate said that 2014 organic sales, which excludes currency swings and acquisitions, rose 4.5 percent, matching the company estimates signalled in October last year that it was likely to fall short of its five percent target.
Nestlé’s 2015 goal includes improvements in margins and underlying earnings per share in constant currencies. The company also proposed to increase its dividend to 2.20 Swiss francs per share.
In a statement commenting on the percentages, Nestlé Chief Executive Paul Bulcke said that he expected 2015 to yield similar figures to 2014.
The size and breadth of Nestlé’s portfolio, normally delivers consistent results through tough market conditions, however it is showing signs of being hurt by increased competition especially from healthier foods.
Full-year organic sales rose 5.4 percent in the Americas, 1.9 percent in Europe and 5.7 percent in Asia, Oceania and Africa.
As a result of slowing economic growth from countries such as China and Brazil, and cost-conscious shoppers in Europe and North America remaining cautious, the global consumer goods sector has downsized its growth expectations. Yet, Nestlé’s stock currently trades at roughly 22 times earnings, on par with the sector average.
Faced with slowing growth, Nestlé has begun to reshape its portfolio, focusing on faster-growing, higher-margin products that appeal to changing consumer tastes.