Nestle posts disappointing results and hints at option of selling L'Oréal stake

Kit Kat-maker reported revenues rose 2.4 per cent last year on an organic basis, below analyst expectations for a 2.7 per cent increase

Josie Cox
Business Editor
Thursday 15 February 2018 09:23 GMT
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The Kit Kat company is aiming for revenue growth of between 2 and 4 per cent this year
The Kit Kat company is aiming for revenue growth of between 2 and 4 per cent this year

Consumer goods giant Nestlé has posted a disappointing set of earnings for 2017, with sales growth falling to its lowest level in more than two decades.

The Kit Kat-maker reported that revenues rose 2.4 per cent last year on an organic basis, which was below analyst expectations for a 2.7 per cent increase. Chief executive Mark Schneider said that Nestlé was aiming for revenue growth of between 2 and 4 per cent this year.

The group also opened the door to a potential sale of its investment in L’Oréal, explaining that it would not raise its stake of 23 per cent in the French cosmetics group and that it would keep all its other options open.

It also said that it would not renew a shareholder pact with the Bettencourt family, which is also a major L’Oréal stakeholder, but that it remains “committed to the company that has given us very good returns over the years”.

L’Oréal’s sales growth helped to buoy Nestlé’s results in 2017, which were challenged by a tough performance across its mass-market food and drinks business. Last week, L’Oréal said that it had the resources to buy out Nestlé’s holding and is ready to do so.

Mr Schneider took over as boss around a year ago and has demonstrated a keen focus on merger and acquisition opportunities.

As well as hiving off Nestle’s US chocolate business, he has overseen the purchase of Canadian dietary supplements maker Atrium Innovations for $2.3bn.

On Thursday the group indicated that it would continue this strategy of “active portfolio management”.

“The sweet spot is in small to mid-sized deals, but we don’t want to rule out anything,” Schneider told reporters.

Additional reporting by newswires

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