STYLE

Swiss foods giant Nestle sees smaller rise in sales as pace of global economic growth slows

10/18/2012 01:41 EDT | Updated 12/17/2012 05:12 EST
GENEVA - Nestle SA, the world's biggest food and drink company, on Thursday said its sales growth slowed to 11 per cent in the first nine months of 2012 as demand eased both in developed economies and emerging markets, where high growth is starting to cool off.

The maker of Nescafe instant coffee, Jenny Craig weight loss products and Haagen-Dazs ice cream said sales rose to 67.6 billion Swiss francs ($73.3 billion) through September, up from 60.9 billion francs in the same period last year.

With 11.7 per cent growth in emerging markets and 2.4 per cent growth in developed markets, the company, based in Vevey, Switzerland, said it expects organic sales - which exclude products of newly-acquired businesses - to grow 6.1 per cent this year.

That is a slowdown in growth from the first six months of the year, when sales grew 12.9 per cent in emerging markets and 2.6 per cent in developed markets. Organic growth in sales was 6.6 per cent.

Thursday's figures sent shares in the company slumping soon after the Zurich exchange opened. They closed down by 1.69 per cent at 61.20 francs ($66.31), but are still up 13 per cent since the start of the year.

The company said it kept up strong growth but at a slower pace because of a global economy that has been weighed down by Europe's chronic debt crisis and sluggish American growth. It also maintained its full-year outlook, despite the tough trading conditions.

"We grew in the intensely competitive developed markets in spite of a general economic malaise and low levels of consumer confidence," said Nestle Chief Executive Paul Bulcke.

He said the success in less-developed markets is due to the company "expanding our routes to market and enhancing our product offerings".

With that success and lowered costs for its raw materials, he added that Nestle's "continued momentum in real internal growth, combined with some easing of input cost pressures, allows us to confirm our full-year outlook."

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