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Nestle results in line with expectations

Thursday, February 14 07:23:00

Nestle's said it expected 2013 to be as challenging as 2012 as it reported sales growth picked up in the last three months of 2012 after a disappointing third-quarter for the world's biggest food group.

Underlying sales growth at the maker of KitKat chocolate bars and Maggi soup came in at 5.9 percent for the year, meeting average analyst expectations, and implying a slight recovery from some 5 percent third-quarter growth.

"The environment looks to be every bit as challenging in 2013 as it was in 2012," Chief Executive Paul Bulcke said.

"But 2013 will again provide opportunities to leverage our competitive advantages, deliver on our growth opportunities and benefit from our drive for continuous improvement," he said, reiterating Nestle's standard outlook for the year.

Nestle has long targeted 5-6 percent underlying sales growth as well as improved margin and underlying earnings per share in constant currencies.

Sales growth in Asia, Oceania and Africa, which accounted for about one fifth of sales, came in at 8.4 percent. Third-quarter sales in the region had taken a surprise hit from one-off events such as typhoons in the Philippines, social unrest in Egypt and business disruptions due to sanctions on Iran.

Helvea analysts said that implied a slight improvement up in the final three months but noted it was far from the double-digit growth of the first half of 2012.

"Not the ground breaking results as seen at peers. Given recent share price increase and several upgrades, there could be some pressure," they said in a note.

Full-year results at Anglo-Dutch consumer goods company Unilever Plc/NV's beat expectations last month, propelled by strong sales of its haircare products and soaps in emerging markets. French rival Danone publishes its 2012 results on Feb. 19.

Nestle's shares, which are up almost 8 percent this year versus just 3 percent for the European sector index, trade at 17.8 times estimated 2013 earnings, in line with Unilever but at a premium to Danone's 16.2 times. ( C) Reuters