Mark Schneider, Nestlé CEO, said: "Our 2017 organic sales growth was within the guided range but below our expectations, in particular due to weak sales development towards the end of the year. Sales growth in Europe and Asia was encouraging while North America and Brazil continued to see a challenging environment.
Our cost reduction initiatives delivered margin improvement ahead of 2017 expectations, in spite of considerable commodity price increases.
During the past months, we have completed initial portfolio adjustments with very favorable results. We will continue this active portfolio management approach in a disciplined manner and fully in line with our strategy. Regarding our core portfolio, accelerating our growth through product innovation and renovation is high on the agenda.
Organic sales growth is expected to improve in 2018 and we are firmly on track for our 2020 margin improvement target."
Read the press release of which highlights are:
- Organic growth of 2.4%, with 1.6% of real internal growth (RIG) and pricing of 0.8%.
- Total reported sales increased by 0.4% to CHF 89.8 billion (2016: CHF 89.5 billion). Net divestments had a negative impact of 1.9% (mainly due to the creation of the Froneri joint venture).
- Underlying trading operating profit margin ahead of expectations, up 50 basis points in constant currency and up 40 basis points on a reported basis to 16.4%.
- Trading operating profit margin decreased by 60 basis points on a reported basis to 14.7%, in line with our October 2017 expectations. This included a CHF 900 million increase mainly in restructuring and related costs to CHF 1.5 billion.
- Underlying earnings per share increased by 4.7% in constant currency and by 4.6% to CHF 3.55 on a reported basis.
- Proposed dividend increase of 5 centimes (2.2%) to CHF 2.35 per share.
- Nestlé announces Board decisions regarding the Gerber Life Insurance business and the L’Oréal investment.
- 2018 Outlook: organic sales growth between 2% and 4%; underlying trading operating margin improvement in line with our 2020 target. Restructuring costs1 are expected at around CHF 700 million. Underlying earnings per share in constant currency and capital efficiency are expected to increase.