Confectionery giant Nestle posted better-than-expected first-half sales and kept to its 2015 outlook despite a recall of Maggi noodles in India, counting on strong pricing to counter tough market conditions.
The company, which employs 1,800 people in York and 500 in Halifax, said it expects annual sales growth of around five per cent.
Organic growth was 4.5 per cent in the first half, ahead of the 4.3 per cent rate analysts had expected.
“Nestle was able once again to deliver robust results, especially when compared to competition,” Vontobel analyst Jean-Philippe Bertschy said in a note, keeping his “buy” rating.
Chief Executive Paul Bulcke said first-half results were in line with expectations thanks to growth across product categories and geographies.
“Our investments in the new growth platforms Nestle Health Science and Nestle Skin Health are delivering and complement the good momentum in our food and beverages businesses. This allows us to confirm the outlook for the full year,” he said.
The world’s largest packaged food company, with brands like Nescafe, KitKat and Perrier, said sales fell 0.3 per cent to £28bn in the half year to June versus analysts’ expectation for a dip of 0.1 per cent.
Net profit fell 2.5 per cent to £3bn, lagging expectations of a 2.3 per cent rise.
Like all consumer goods companies, Nestle has been grappling with slowing sales as once-hot economies like China and Brazil cool and European consumers continue to purchase cautiously.
All consumer goods companies are suffering from sluggish markets worldwide but Nestle’s particular problems involve its US frozen foods business where sales are falling amid weak consumer perceptions around the health of frozen food, and a pullback in China.
In addition, Nestle’s India unit last month reported a 20 per cent slide in second-quarter sales, after its Maggi noodles were pulled from shelves due to safety concerns.
“In India, our withdrawal of Maggi noodles resulted in negative organic growth which will continue into the second half. We are engaging fully with the authorities as we work to relaunch the product,” the company said on Thursday.
An Indian court has ruled in favour of Nestle in its appeal challenging Indian food safety regulators’ findings that its Maggi instant noodles contained excess lead, television channels reported on Thursday.