Nestle beats its long-term growth forecast of 5% to 6%
Nestle, the world’s largest food company, raised its sales forecast for this year because of price increases and higher shipments of Easter chocolate.
By Bloomberg |
GENEVA: Nestle, the world���s largest food company, raised its sales forecast for this year because of price increases and higher shipments of Easter chocolate. The shares jumped the most since August. Revenue growth excluding acquisitions, divestments and currency fluctuations should be ���close��� to last year���s rate of 7.4%, the Vevey, Switzerland-based maker of Nescafe soluble coffee said in an unscheduled announcement on Thursday. That would make 2008 the fourth straight year that Nestle beats its long-term growth forecast of 5% to 6%.
Nestle���s outgoing chief executive officer Peter Brabeck-Letmathe said on Thursday that Nestle���s operating margin will widen this year, and raw material costs will ���abate somewhat��� in the second half. Price rises averaging 3% on 10,000 products from chocolate to Purina pet food last year helped blunt the impact of soaring commodity prices and flagging consumer spending. Cocoa has risen 34% in 12 months and robusta coffee is up 77%.
���It���s the first time we���ve seen Nestle make an announcement like that,��� said Claudia Lenz, an analyst at Bank Vontobel with a ���buy��� rating on the stock. ���They want to make a sign that they���re becoming more open to financial markets. Brabeck likes to be the star there, and he���ll leave the company in the best shape ever.���
Brabeck will cede the post of CEO to Paul Bulcke, former head of Nestle���s business in the Americas, next month. Nestle rose 24 francs, or 5%, to 501.5 francs in Zurich trading. That was the second-biggest increase in the Dow Jones Stoxx 600 Index of the largest European companies, which slid the most in two weeks today.
It���s the largest increase in Nestle shares since the company announced a 25 billion-franc share buyback on August 15. The Swiss foodmaker���s buyback program and last year���s decision to scrap its AAA credit rating are signs that Nestle is becoming more receptive to shareholders��� concerns, Lenz said.
Nestle last month proposed easing limitations on voting rights at its annual general meeting on April 10.
���The group���s organic growth is off to a very strong start in 2008,��� Peter Brabeck-Letmathe, who will step down as chief executive officer next month, said in the statement. The new target for 2008 eases investors��� concerns that consumers may pare spending due to Nestle���s price increases, Marco Gulpers, an analyst at ING Wholesale Banking said.
The consensus among analysts was for sales excluding acquisitions, divestments and currencies to increase 5.5% this year, Lenz said. Agricultural commodity prices have gained on ���strong��� global demand for food, increased use of crops for biofuels, and the ���decisive presence��� of investors speculating on the markets, Nestle said.
Nestle���s outgoing chief executive officer Peter Brabeck-Letmathe said on Thursday that Nestle���s operating margin will widen this year, and raw material costs will ���abate somewhat��� in the second half. Price rises averaging 3% on 10,000 products from chocolate to Purina pet food last year helped blunt the impact of soaring commodity prices and flagging consumer spending. Cocoa has risen 34% in 12 months and robusta coffee is up 77%.
���It���s the first time we���ve seen Nestle make an announcement like that,��� said Claudia Lenz, an analyst at Bank Vontobel with a ���buy��� rating on the stock. ���They want to make a sign that they���re becoming more open to financial markets. Brabeck likes to be the star there, and he���ll leave the company in the best shape ever.���
Brabeck will cede the post of CEO to Paul Bulcke, former head of Nestle���s business in the Americas, next month. Nestle rose 24 francs, or 5%, to 501.5 francs in Zurich trading. That was the second-biggest increase in the Dow Jones Stoxx 600 Index of the largest European companies, which slid the most in two weeks today.
It���s the largest increase in Nestle shares since the company announced a 25 billion-franc share buyback on August 15. The Swiss foodmaker���s buyback program and last year���s decision to scrap its AAA credit rating are signs that Nestle is becoming more receptive to shareholders��� concerns, Lenz said.
Nestle last month proposed easing limitations on voting rights at its annual general meeting on April 10.
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���The group���s organic growth is off to a very strong start in 2008,��� Peter Brabeck-Letmathe, who will step down as chief executive officer next month, said in the statement. The new target for 2008 eases investors��� concerns that consumers may pare spending due to Nestle���s price increases, Marco Gulpers, an analyst at ING Wholesale Banking said.
The consensus among analysts was for sales excluding acquisitions, divestments and currencies to increase 5.5% this year, Lenz said. Agricultural commodity prices have gained on ���strong��� global demand for food, increased use of crops for biofuels, and the ���decisive presence��� of investors speculating on the markets, Nestle said.
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