Swiss nutrition, health and wellness giant Nestle SA (NSRGY,NSTR.L) reported Thursday a slight decline in reported sales for the nine-month period, reflecting divestments and negative currency impact. Organic sales growth was 2.6 percent, supported by improved real internal growth or RIG of 1.8 percent and pricing of 0.8 percent.
Looking ahead, the company now projects trading operating profit margin to decrease by 40-60 basis points in constant currency. Nestle noted that its structural savings initiatives are progressing faster than originally planned, leading to an additional increase of 400 million francs to 500 million francs in restructuring and related expenses in 2017.
The underlying trading operating profit margin for 2017 is set to improve by at least 20 basis points in constant currency, in line with the company's expectations. The company expects underlying earnings per share in constant currency and capital efficiency to increase.
Further, Nestle confirmed its sales guidance for 2017, and now expects organic growth for the full year to be around the level of the nine-month period.
For the nine-month period, sales edged down 0.4 percent to 65.27 billion Swiss francs from 65.51 billion francs in the prior year. The results reflected net divestments of 2.6 percent, mainly due to the creation of the Froneri joint venture, and negative foreign exchange effects of 0.4 percent.
In the nine months, organic growth was 0.8 percent in developed markets and 5.1 percent in emerging markets.
Zone Americas recorded sales of 20.49 billion francs, up 2 percent on a reported basis and 1.3 percent organically. Sales in North America remained flat, while Latin America maintained mid-single-digit organic growth. North America's pricing improved while Latin America's pricing declined.
Zone Europe, Middle East and North Africa or Zone EMENA generated sales of 11.82 billion francs, down 9.4 percent on a reported basis, but up 1.9 percent on an organic basis.
Zone Asia, Oceania and sub-Saharan Africa's sales increased 2 percent to 11.9 billion francs. Organic growth was strong, reaching 5.3 percent at the end of September. The company recorded slight growth in sales in Nestlé Waters and Nestlé Nutrition.
Mark Schneider, Nestlé CEO: "Our sales results for the nine-month period are in line with our expectations communicated in July. Organic sales growth continued to benefit from industry-leading volume growth, which illustrates our ability to innovate and meet consumer demand. Pricing remained soft..."
In Switzerland, Nestle shares were trading at 84.15 francs, down 0.71 percent.
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