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Lowered Prices Yield Weak Sales Gains For Nestle

August 9, 2013
by candyandsnacktoday

Vevey, Switzerland — Nestle, S.A. reported a 5.3 percent increase in sales for the first half of 2013 today, below analysts’ expectations, a result of prices that were lowered to “leverage softer input costs to meet the expectations of today’s more value conscious consumers,” CEO Paul Bulcke says.

Operating profit increased 6.8 percent to $7.4 billion, while sales reached $49.17 billion for the first six months of 2013, short of the $49.5 billion forecast. The company lowered its long-term expectations accordingly to five percent, down from a five to six percent goal. “It’s not going to be easy, it's going to be a stretch,” CFO Wan Ling Martello says about meeting even the revised target.

In the company’s Americas division, sales totaled $14.8 billion, up five percent from a year ago. Growth in developed markets overall fell to one percent from 2.6 percent a year prior, and in BRIC markets growth was down from 12.9 percent in 2012 to 8.2 percent. The firm touted the strength of the Kit Kat brand in both Latin America and developing markets. Total confectionery sales grew 4.7 percent organically, reaching $5 billion.

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