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Nestlé raises forecast despite sales drop

Posted on 25 October 2011

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Nestle has cautiously raised its forecasts for organic sales growth this year despite posting a 13% drop in sales over the first nine months due to the strong Swiss franc and loss of earnings stemming from the disposal of eyecare company Alcon.

The Swiss company reports sales of 60.9 billion francs ($67.84 billion) through September, down from 70.4 billion francs during the same period in 2010. Chief executive Paul Bulcke says, “In spite of raw materials and financial markets, we hope to slightly outperform our organic growth target. For the year as a whole, in spite of input cost pressures, we expect to slightly over-perform against our long-term organic growth range of 5-6% and continue to strive for a margin improvement in constant currencies.” Discounting the currency and disposal effects, Nestle raised its long-term organic growth outlook based on what it called strong organic growth of 7.3 percent and 4.1% real internal growth.

The organic growth was 5.8% in the Americas, 5.0% in Europe and 13.1% in Asia, Oceania and Africa. Developed markets grew 4.0%, while emerging markets achieved around 13.1% organic growth. KitKat in Brazil was among the market launches in Latin America and KitKit Black did well in Japan.

In August, the company posted a drop in half-year earnings, blaming volatile markets, rising commodity prices and particularly the strength of the Swiss franc for dragging down profits.

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