Nestlé feels deflation and Swiss franc squeeze

The company is based in Vevey Keystone

Nestlé reported full-year sales growth in line with analysts' lowered expectations on Thursday, as the world's largest packaged food company grapples with deflation in Europe and slowing demand in Asia.

The Switzerland-based maker of Nescafé coffee and KitKat chocolate said 2014 organic sales, which excludes currency swings and acquisitions, rose 4.5%. Analysts on average were expecting a 4.5%  increase, according to a Reuters poll, after Nestlé signalled in October it was likely to fall short of its 5% goal.

Full-year sales were CHF91.6 billion ($97.3 billion), while net profit was CHF14.5 billion.

The size and breadth of Nestlé’s portfolio, which also includes bottled water, pet food and prepared food, allows it to deliver consistent results during most storms, but even it is being hurt by increased competition, especially from healthier foods, economic weakness and deflation. Demand for the company’s products in important developing markets has also started to slow down.

For 2015, Nestlé said it is aiming for organic growth of 5% with improvements in margins and underlying earnings per share in constant currencies.