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Nestle Raises Forecast

October 20/Vevey, Switzerland/The Associated Press -- Food and drink giant Nestle SA has modestly raised its forecasts for organic sales growth this year despite posting a 13% drop in sales over the first nine months due to the strong Swiss franc and loss of earnings stemming from the disposal of eyecare company Alcon.

The Vevey, Switzerland-based company said it had sales of 60.9 billion francs ($67.84 billion) through September, down from 70.4 billion francs ($78.42 billion) during the same period in 2010.

The maker of Nescafe, Jenny Craig and Haagen-Dazs said the results were affected by a sharp rise in the value of the franc and the disposal of its stake in Alcon. Nestle sold its stake in the firm to pharmaceutical company Novartis last year for a net profit of some $45 billion.

Discounting those two effects, Nestle raised its long-term organic growth outlook based on what it called strong organic growth of 7.3%. That included 13.1% organic growth in emerging markets and 4% in developed markets.

Chief executive Paul Bulcke said the company was focused on developing products that can build market share.

"The constant renovation of our existing product portfolio together with our strong pipeline of game-changing innovations resulted in many market share gains," Bulcke said.

"For the year as a whole, in spite of input cost pressures, we expect to slightly over-perform against our long-term organic growth range of 5-6% and continue to strive for a margin improvement in constant currencies," he said.

A more detailed look at the nine-month figures show that Nestle saw sales fall across all areas and product groups compared with a year ago.

In North America, the company's biggest market, Nestle said tough economic conditions and higher pricing weighed on demand, but new lines like DiGiorno Pizza Combos, Lean Cuisine snacks, and Dreyer's Smoothies helped compensate.

PetCare and frozen pizza saw accelerated growth and market share gains, the company said, and Coffee-mate had strong growth due to new varieties of Cafe Collections and the launch of Coffee-mate Natural Bliss. It said Nescafe also performed well.

In Europe, Nestle said its roll-out of Nescafe Dolce Gusto and Maggi Juicy Roasting helped make up for the tough environment. It said France was a particular highlight, but there was also good growth in Italy, Switzerland and the Benelux countries. Despite the economic crisis, Greece, Spain and Portugal did well too.

In August, the company posted a drop in half-year earnings, blaming volatile markets, rising commodity prices and particularly the strength of the Swiss franc for dragging down profits.

From the October 21, 2011, Prepared Foods' Daily News.