Economy Nestle cuts full-year outlook after nine-months sales miss

Nestle cuts full-year outlook after nine-months sales miss

 Nestle
Nestle

Food giant Nestle (NESN.VX) lowered its full-year outlook on Friday as a Maggi noodle scandal continued to drag down third-quarter sales.

The world’s largest packaged food company’s sales dropped 2.1 percent to 64.9 billion Swiss francs (44 billion pounds) in the nine months to September, missing analysts’ forecast of 65.9 billion francs in a Reuters poll.

“After a good performance in the first half of the year we were impacted in the third quarter by exceptional events, with Maggi noodles in India and a rebate adjustment in Nestle Skin Health,” Chief Executive Paul Bulcke said.

Underlying “organic” growth — adjusted for currency swings, acquisitions and divestitures — slowed to 4.2 percent in the first nine months from 4.5 percent in the half-year, sliding further behind the company’s 5 percent organic growth target for 2015.

The company cut its 2015 outlook to around 4.5 percent, below its long-term model calling for 5 to 6 percent growth.

In the United States, chilled frozen food sales began warming after a major revamp of Nestle’s Lean Cuisine brand, but this was contrasted with lagging sales in China, which were showing slower sales recovery, Bulcke said. India’s Maggi noodle recall continued to have a significant impact on growth in the South Asia Region, Nestle said.

In its Skin Health division, Nestle’s U.S prescription drug rebates exceeded the amount of money that was set aside for this purpose. This resulted in an additional one-off charge in the third quarter, it said.