Nestle reduces revenue forecast to 2013

Nestlé reduced its revenue forecast for this year, after recording disappointing sales in Europe. The largest of the world's processed foods company announced yesterday results below analysts ' expectations for the fourth consecutive quarter.
Nestle reported 5.3% increase in sales for the first half, to 45.2 billion Swiss francs (US $ 49.1 billion), down from 45.6 billion francs expected by analysts. The organic criterion used by the Swiss company, which excludes the impact of foreign exchange variations and acquisitions of companies or operations, sales rose by 4.1% in the first half of the year, below the target that the company had outlined previously for the year of 5% to 6%.
The numbers reported yesterday indicate that there was a slowdown compared to the first quarter, when there was organic growth of 4.3%. The company now expects to achieve organic growth around 5% this year.
Analyst Andrew Wood of Sanford c. Bernstein, said that quarterly sales performance was "very disappointing". He pointed out that organic growth for the second quarter, 3.9 percent, was well below the average of forecasts of 4.6%. It was also "the lowest growth since the third quarter of 2009 [...] and the increase in prices [0.8%] was the lowest in over ten years, since 2002, "he wrote in the report.
The world of Nestlé CEO Paul Bulcke said that "organic growth was somewhat stalled, reflecting lower prices in our markets as we lower costs of inputs to meet the expectations of today's consumers more concerned with values".
Sanford c. Bernstein analyst noted that the revision of forecasts means that an annual advance of less than 5% is a possibility. "It reminds us a little of the now infamous prediction of early 2009 ' at least get to 5% [...] that ended in a 4.1% annual growth ".
Sales walked more slowly on the European market, where the increase was 1.7%. According to Nestlé, consumers have been "extremely sensitive to prices," and the company was "receptive" to it, which made its operating margin to fall in the region in 10 percentage points.
Sales in the region that includes Asia, Oceania and Africa rose 5% in the first half of the year, a sharp slowdown compared to 11.9% and 8.4% recorded in the years 2011 and 2012, respectively.
Despite the weak sales numbers, Nestlé still recorded net profit of 5.1 billion francs, within analysts ' forecasts.
Nestle shares fell 2.32% listed the 63.2 francs yesterday.