Nestle reported slightly worse-than-expected half-year sales on Thursday, hurt by a recall of its Maggi noodles in India.
The world's largest packaged food company, with brands like Nescafe, KitKat and Perrier, reported sales fell 0.3 per cent to 42.84 billion Swiss francs ($43.87 billion) in the half year to June versus analysts' expectation for a dip of 0.1 per cent to 42.95 billion, according to a Reuters poll.
Net profit fell 2.5 per cent to 4.52 billion francs, lagging analysts' average estimate for a 2.3 per cent rise to 4.74 billion.
Like all consumer goods companies, Nestle has been grappling with slowing sales as once-hot economies like China and Brazil cool and European consumers continue to purchase cautiously.
Keeps outlook
The company kept its outlook for the year. It had earlier forecast annual sales growth of around 5 per cent, at the low end of its long-term model calling for 5 to 6 per cent growth.
Organic growth was 4.5 per cent in the first half.
All consumer goods companies are suffering from sluggish markets worldwide but Nestle's particular problems involve its US frozen foods business where sales are falling amid weak consumer perceptions around the health of frozen food, and a pullback in China.
In addition, Nestle's India unit last month reported a 20 per cent slide in second-quarter sales, after its Maggi noodles were pulled off shelves due to safety concerns.
"In India, our withdrawal of Maggi noodles resulted in negative organic growth which will continue into the second half. We are engaging fully with the authorities as we work to relaunch the product," it said on Thursday.
The Indian government has filed a lawsuit against Nestle's Indian unit, seeking Rs 640 crore ($99 million) in damages on behalf of consumers after the country's worst packaged food scare in a decade.
Nestle stock trades at around 21 times 12-month forward earnings, roughly in line with rivals Danone and Unilever, according to StarMine, which weights analysts' estimates by their previous track record.