Nestle S.A. (OTC:NSRGF, VTX:NESN) on Thursday cut its full-year sales guidance and signalled structural changes as demand woes continue to plague the KitKat maker.
Sales over the first nine months of the year sat at 67.15 billion Swiss francs (£59.75 billion), Nestle reported, representing 2% organic growth but a 2.4% decline on a reported basis.
Full-year underlying sales growth guidance was cut from 3% to 2% as a result, following another reduction in July from 4%.
“Consumer demand has weakened in recent months, and we expect the demand environment to remain soft,” chief executive Laurent Freixe commented.
Nestle has struggled to win back consumers after a surge in prices in recent years has seen many turn to cheaper non-branded goods.
Though prices increased by 1.6% over the period, against 2% during the first half, Nestle also pointed to “consumer hesitancy towards global brands linked to geopolitical tension”.
Plans were unveiled to reduce the size of the company’s board on the back of the results, with Nestle’s Latin America and North America units set to be merged, alongside its Greater China and Asia, Oceania and Africa businesses.
“Investors can see the business is being proactive in the face of a difficult market backdrop," AJ Bell analyst Russ Mould commented.
“The cut to guidance may not have come as a huge shock given this is the first set of quarterly numbers under new chief executive Laurent Freixe.
“It’s not uncommon for an incoming boss to take a kitchen sink to forecasts in an attempt to rebase expectations and set themselves up for a successful tenure.”
Shares climbed 2.7% on Thursday.