SWITZ: Nestlé revenue drops on bottled water

Swiss food and beverage giant Nestlé posted a drop in nine-month revenue this morning (22 October), hurt by the euro's decline against the Swiss franc and consumers buying less bottled water.

Sales dropped to CHF79.55bn (US$79bn) from CHF81.36bn a year earlier. The company said it plans to buy back CHF7bn of shares this year, up from a previous CHF4bn target.

Divestitures, net of acquisitions, had a negative impact of -0.6% on group sales, as did the currency effect of -5.2% due to the strength of the Swiss franc compared to most other currencies, Nestlé said.

However, in the first nine months of 2009 Nestlé achieved organic growth of 3.6% for its food and beverage business. Real internal growth reached 1% having accelerated throughout the year and across most segments of the business.

The company repeated its full-year outlook for "volume-driven organic sales acceleration", after it dropped its previous target of "at least approaching 5%" in August after reporting lower-than-expected half-year organic sales growth of 3.5%.

Paul Bulcke, CEO of Nestlé, said: "In these challenging times, we have been streamlining our structures and product portfolio and, at the same time, we continue to invest in innovative technologies and expand our R&D capabilities around the world. In addition, we have increased spending in product innovation and consumer-facing brand-support."

He added: "All this allows me to confirm my expectation that volume-driven organic growth will further accelerate and that the EBIT margin in constant currencies will improve for the full year."

Nestle's struggling bottled water business saw some improvement, particularly in Europe, with organic growth down 1.8% to CHF7.2bn, compared with a fall of 2.9% in the first half. The category as a whole, however, was weak in North America, although the Nestlé business gained market share.

Emerging markets enjoyed 7.5% organic growth.

Click here for the results release and check back later for insight comment from Nestle's investor conference call.