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 Sales dropped 2.1 percent to 64.9 billion Swiss francs ($68 billion)
in the nine months through September, missing analysts' average
forecast of 65.9 billion in a Reuters poll.
Organic or underlying growth, adjusted for currency swings,
acquisitions and divestitures, slowed to 4.2 percent in the period
from 4.5 percent in the first half, sliding further behind its 5
percent target for 2015.
The company cut its 2015 outlook to around 4.5 percent, below its
long-term model calling for 5 to 6 percent growth.
"The shortfall comes from pricing, as Nestle does not seem to have
been able to pursue its pricing actions as hoped, and more
importantly the issue seems to be again the Asia, Oceania, Australia
region, with sales down in the third quarter," Barclays analysts
wrote in a note.
Chief Executive Paul Bulcke said: "After a good performance in the
first half of the year, we were impacted in the third quarter by
exceptional events, with Maggi noodles in India and a rebate
adjustment in Nestle Skin Health."
Maggi noodles were subject to a recall in India over safety
concerns.
In the United States, frozen food sales began improving after a
revamp of Nestle's Lean Cuisine brand, but this contrasted with
lagging sales in China, which showed a slower sales recovery, Bulcke
said.
SIGNIFICANT IMPACT
India's Maggi noodle recall continued to have a significant impact
on growth in the South Asia Region, Nestle said.
In its Skin Health division, Nestle's U.S. prescription drug rebates
exceeded what it had set aside for this purpose, resulting in an
additional one-off charge in the third quarter.
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Despite prospects that Europe's hot summer would have consumers
grabbing ice cream out of freezers, sales at the group's milk
products and ice cream unit fell 350 million francs year-on-year to
11 billion. Water, however, achieved 7.1 organic growth through
September, second only to confectionery at 7.8 percent.
Nestle earlier this month confirmed it was in advanced talks to
merge its international ice cream business with R&R Ice Cream, in
its latest effort to refocus on other, higher-performing brands and
advance its goal of becoming a "nutrition, health and wellness"
company.
Unilever <ULVR.L><UNc.AS>, the global number one in ice cream, on
Thursday posted third-quarter underlying sales up 5.7 percent,
thanks in part to a strong summer. But the Anglo-Dutch group said it
expected sluggish global markets to keep weighing on performance.
Nestle stock trades at around 21.4 times 12-month forward earnings,
above Danone <DANO.PA> and Unilever, according to StarMine, which
weights analysts' estimates by their track record.
($1 = 0.9522 Swiss francs)
(Editing by Michael Shields and David Holmes)
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