Nestle nudges restructuring dial higher as growth looks flat

Swiss food giant Nestle announced on Thursday that it was looking to expedite its restructuring programme aimed at improving margins as it expected organic growth to remain flat throughout its fourth quarter trading.

The makers of packaged foods such as Kit Kat and Maggi had been put under scrutiny regarding their business models and brand portfolios as consumers more and more began to swing towards fresh, healthy, local foods, at the same time it was receiving pressure from investors to improve returns.

Nestle said on Thursday that it its operating margin would likely fall between 0.4% and 0.6% as restructuring costs looked to top out at CHF 1bn, double the initial estimate.

The firm did however reiterate its guidance for overall charges of up to CHF 2.5bn until 2020.

Organic sales grew 3.1% in the three months leading to 30 September thanks to improved trading in Europe and Asia, but chief financial officer Francois-Xavier Roger cautioned that the European, Asian, Middle Eastern and North African markets may not repeat their solid showings again in the last quarter.

As of 1010 BST, shares had slipped just 0.65% to CHF 84.20 each.