Nestle 2018 results: share price climbs 2% after uptick in sales growth

Organic growth grew by 3% at the Swiss transnational food and drink company after the company’s overhaul plans begin to pay off.

Nestle recorded organic growth of 3% in its full-year 2018 results, with the company supported by strong momentum in China, North America and its infant nutrition business last year.

Strong sales growth helped the company’s share price climb more than 2% on Thursday morning, breaking a run of weaker growth tied to consumers moving away from processed food in favour of fresh produce.

‘We are pleased with our progress in 2018,’ Nestle CEO Mark Schneider said. ‘Nestle keeps investing in future growth and – at the same time – has increased the amount of cash returned to shareholders through our dividend and share buyback program.’

‘We are on our way to meeting our 2020 targets and positioning Nestlé for sustained and sustainable growth in the years beyond,’ he added.

Herta sale part of wider divestment strategy at Nestle

Another factor that has helped improve the outlook of Nestle and its share price to rise by more than 40% last year is its ambitious divestment strategy, which saw the company put pre-packed frankfurter business, Herta Foods, up on the chopping block.

Nestle’s CEO told reporters on Thursday that investors can expect further divestments, reiterating that portfolio changes could easily exceed 10% of group sales – a figure he used as a yard stick back in September 2017.

‘That was just an indication to show that we are serious about this. It doesn’t mean we’ll stop when we get there,’ Schneider told reporters at the company’s headquarters on Thursday.

‘We are satisfied with the results we present today, but we still have ambitious targets,’ he added. ‘There’s no reason to lean back.’

Activist shareholder Third Point drives divestment at Nestle

Activist investor Daniel Loeb took a $3 billion stake in Nestle back in 2017 through his fund Third Point and has been vocal to shareholders about how the company could double its earnings per share over the next three years if it embarked on an aggressive divestment strategy.

Earnings per share at Nestle increased by 45.5% to CHF 3.36 on a reported basis. Underlying earnings per share increased by 13.9% in constant currency and by 13.1% on a reported basis to CHF 4.02, according to its latest trading update.

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