Nestle will have ‘challenging’ 2014, in line with 2013: CEO
Nestle shares fell on Thursday after the group announced lower-than-expected net profit for 2013 and guided for another "challenging year" in 2014.
The rising sales, operating profit margins and dividends were not enough to please investors, and neither was the 4.6 percent organic growth number. That was in line with expectations, but the group's slowest growh rate in four years. Coming in at 10 billion Swiss francs, the food giant's 2013 net profit fell short of analysts' forecasts.
Paul Bulcke, CEO of Nestle told CNBC he was not disappointed with the results, saying "I see this as a solid set of figures in perspective of the environment."
In its statement, Nestle said the cost of portfolio restructuring and the currency impact were the main reasons behind the miss.
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Furthermore, price pressures from Europe and weak demand from emerging markets added to the group's woes. Nestle warned investors that the headwinds would continue through the current year.
Bulcke said 2014 would be "pretty much in line" with 2013 as consumer confidence in the U.S. and Europe remains subdued and growth in emerging markets slows.
"The developing markets are developing further but on another pace, and I feel this is more sustainable", he continued.
"We play on both", Bulcke added when asked whether Nestle should scale back operations in some regions." That's why we've kept our focus on the developed world. We are growing in Europe."
Paul Bulcke defended the group's 23 percent stake in French cosmetic giant L'Oreal, arguing it didn't need to reduce its stake further for now. L'Oreal announced on Tuesday that it would buy back 8 percent of its capital from Nestle, thus reducing the Swiss's group stake to 23.29 percent from its previous 29.4 percent.
"What we did makes strategic sense", the Nestle CEO said, adding that it had remained loyal to L'Oreal for over four decades and that due to its "quite sizeable" stake, Nestle would remain "a constructive partner in the business."
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