Nestle 2009 Revenue Growth Slows as Consumers Buy Less Water
Nestle SA, the bottler of Perrier and Vittel, said sales growth slowed in 2009 as the recession led consumers to spend less on bottled water and Jenny Craig weight-loss programs.
Revenue, excluding acquisitions, divestments and currency swings, rose 4.1 percent last year, the Vevey, Switzerland-based maker of Nescafe soluble coffee said in a statement today. That compares with 2008’s 8.3 percent pace and the 3.9 percent average of 16 analysts’ estimates compiled by Bloomberg. Net income dropped to 10.4 billion francs, beating the 10.2 billion- franc median estimate, on lower capital gains.
The world’s largest food company missed its long-term sales target of annual growth between 5 percent and 6 percent for the first time after four years of beating the goal. Nestle gets more than a tenth of its sales from bottled water, having bought San Pellegrino and Perrier in the 1990s. Nestle’s bottled water revenue declined 1.4 percent, excluding currencies, acquisitions and disposals, as consumers bought cheaper generic alternatives.
“Private label is possibly the single biggest competitive threat to branded bottled water,” Susanne Seibel, an analyst at Barclays Capital, wrote in a note before the results.
Nestle shares have gained 32 percent in the past year, compared with a 43 percent gain in Unilever, which said Feb. 4 fourth-quarter sales growth slowed.
San Pellegrino
Nestle’s San Pellegrino brand water sells at four times the price of a generic version in Swiss Coop stores.
Profit declined as the year-earlier figure was boosted by a 9.2 billion-franc capital gain from selling a 25 percent stake in eyecare company Alcon Inc. to Novartis AG. This year, Nestle will sell its remaining majority stake to the Swiss drugmaker for $28.1 billion.
Nestle said it’s raising its dividend 14 percent to 1.60 francs a share. The company said it plans to buy back 10 billion francs of stock this year.
The volume of goods sold rose 1.9 percent in the year, more than the average 1.4 percent estimate.
Nestle said Oct. 22 it expected full-year sales to accelerate from the 3.6 percent pace of “organic” growth in the first nine months, led by an increase in shipments. The company also said at the time it expected its full-year operating margin to improve, excluding currency effects.
