Nestle just beat forecasts with underlying sales growth of 8.3 per cent in 2008, although sales and net profit slightly undershot, and it was cautiously upbeat for 2009.
The world's biggest food group also said it did not need to act when a shareholder pact with L'Oreal expires in April. Speculation that Nestle might up its 29 per cent stake in the world's biggest cosmetics firm have weighed on its shares.
Nestle reported that net profit rose 69 per cent to 18 billion Swiss francs ($15.35 billion), compared with average analyst forecasts for 20 billion francs, helped by a big book gain from the sale of part of US eyecare firm Alcon.
The Vevey-based maker of Nescafe coffee, KitKat chocolate bars and Maggi soup said sales rose 2.2 per cent to 109.9 billion francs, compared with 110.5 billion francs forecast in a Reuters poll, as a strong Swiss currency dampened volume growth.
Analysts had expected closely-watched organic or underlying sales growth of 8.2 per cent, after an 8.9 per cent rise for the first nine months of the year.
For 2009, Nestle said it expected the economic downturn to continue to hit consumer demand but it wanted organic growth "at least approaching 5 per cent" compared with a long-term goal for 5 per cent to 6 per cent underlying growth, and reiterated its goal of profit margin improvement at constant currencies.
Analysts expect organic sales growth of 4.5 per cent in 2009.
Shares were indicated to open up 0.5 per cent, according to data from Clariden Leu. The stock is down 11 per cent since the start of the year, underperforming the Dow Jones European food and beverage index.
"We believe that the group will once again be one of the industry's fastest growing companies in 2009," chief executive Paul Bulcke said in a statement. "Nestle's ability to capitalise on a wide variety of market conditions across the world remains one of its decisive competitive advantages."
Big rivals like Procter & Gamble (P&G) and Kraft have recently cut their targets due to the consumer slowdown and retailer destocking, while Unilever said it could not give a specific 2009 outlook.
Underlying its confidence for 2009, Nestle proposed a dividend increase of 14.8 per cent to 1.40 francs per share and said it would buy back around 4 billion francs of shares.
Nestle shares have underperformed of late due to concern it might launch an expensive takeover of L'Oreal. A shareholder lock-up expires on April 29th.
The announcement of the sale of its stake in Alcon last April fired speculation it might want to use the proceeds to buy more of L'Oreal, but most analysts do not expect a move soon.
Today, Nestle noted its agreement with L'Oreal was that it would not increase its stake until six months after the death of Liliane Bettencourt, the 86-year-old billionaire daughter of the group's founder who owns 30 per cent.
Reuters