Nestlé shares fall as food giant warns of sales slowdown

Shares in Nestlé dropped on Thursday after the food and drink giant said that organic growth would slow this year

The Switzerland-headquartered firm, the world's largest publicly held food company behind brands like Smarties, Perrier, Cheerios and Nescafe, said it expects organic sales to increase by "around 4%" in 2024, missing the current consensus estimate of 4.7%.

In 2023, total reported sales fell by 1.5% to CHF 93bn (£84bn) after negative currency movements of 7.8% were only partly offset by a 7.5% increase in pricing. Top-line growth was also held back by soft consumer demand, capacity constraints and a temporary supply disruption for vitamins, minerals and supplements in the second half, Nestlé said.

Organic growth, however, came in at 7.2%, as weak growth in China was lifted by a strong performance elsewhere.

Underlying EPS rose 8.4% at constant currency to CHF 4.80, rising 23.7% to CHF 4.24 on a reported basis mainly reflecting one-off items in the prior year.

"Unprecedented inflation over the last two years has increased pressure on many consumers and impacted demand for food and beverage products," said chief executive Mark Schneider.

"Looking to 2024, we are prioritizing volume- and mix-led growth with increased brand support, as we enhance value for consumers through active innovation and renovation, premiumization, affordability and more nutritious options."

For the current financial year, the company also guided to a "moderate" increase in the underlying trading operating profit margin, while earnings per share in constant currency is expected to improve by between 6% and 10%.

The stock was down 4.2% at CHF 94.94 by 1229 CET.