Nestlé deals double blow as sales disappoint and it struggles to push through price rises

Food giant Nestlé has hit investors with a double whammy of bad news, with disappointing sales and a warning that it was struggling to push through higher prices.

The maker of KitKat and Nespresso, which was hit by contamination fears over its Maggi noodles in India last year, said sales were up 4.2% at Swfr88.8 billion (£62.8 billion) in the year to the end of December.

That was at the bottom end of the range it forecast in October and meant it missed its long-term target of 5%-6% sales growth for the third year running.

Net profit was down by Swfr5.4 billion to Swfr9.1 billion, which the company said reflected the impact of the 2014 sale of part of its L’Oréal stake.

Nestlé said its Asian business had been “seriously impacted” by the Maggi food scare, while economic turmoil in the region also took its toll.

However, in China, the cause of much of the recent upset, there was “increased momentum towards the end of the year”.

In contrast, Nestlé described an “exceptional performance” in western Europe and accelerating growth in the United States.

Nestlé’s Swiss-listed shares sank 3.8% to Swfr71.30.

This was despite an increase in the dividend to Swfr2.25 per share.

Analysts were also left disappointed that the conglomerate did not announce a share buyback programme.