Nestlé has missed sales targets for the second quarter and lowered its forecasts for the full year.
The Swiss food giant today reported organic sales growth of 3.9% - well below the consensus analyst forecast of 4.8%. Indeed, it was the worst result since the third quarter of 2009.
Nestlé said lower pricing hit sales figures during the quarter.
“Organic growth was somewhat muted, reflecting lower pricing by our markets, as we leveraged softer input costs to meet the expectations of today’s more value-conscious consumers,” said Nestlé CEO Paul Bulcke.
At 0.8%, pricing growth was lower than at any point since 2012.
“In summary, the second quarter was very disappointing on the top-line, led by much lower than expected pricing,” said Bernstein analyst Andrew Wood, who added that it “brings fears of a collapse in pricing in coming quarters”.
Nestlé also lowered its full-year forecast for reported sales growth from 5-6% to “around 5%”. Given that organic growth in the first half was 4.1%, Wood said the guidance suggested growth would be below 5%. Sales totalled CHF 45.2bn (£31.65bn) in the first half.
More encouragingly, Nestlé said trading operating profit during the first half increased 6.8% to CHF 6.8bn and margins climbed 20 basis points to 15.1%.
In early trading on Thursday, Nestlé shares slipped 2.5% to CHF 63.10. Over the past year, the shares have climbed 5.8%.