February 20, 2009

Nestle S.A. (NESN.VX), the world's largest food and beverages company Thursday (Feb 19) said its slight rise in 2008 sales to 109.91 billion Swiss francs (US$93.9 billion) from CHF107.55 billion in 2007 was to a large part due to price increases and volume growth.

The company grew volumes by 2.5 percent and was able to hike selling prices by 5.5 percent, according to Nestle's 2008 report published Thursday.

In the fourth quarter, sales were driven by volume growth of 1.2 percent and price increases totalling 5.5 percent.

Zuercher Kantonalbank analyst Patrik Schwendimann said Nestle's volume growth of 1.2 percent in the fourth quarter was a letdown compared with Groupe Danone's 3.7 percent.

Nestle said it expects to post organic sales growth - a revenue growth measure comprising volume and pricing of "at least approaching 5 percent in 2009, compared with 8.3 percent in 2008", a goal some analysts said would be hard to achieve.

Zuercher Kantonalbank expects Nestle to fall short of its organic growth target this year because increasing prices will be tough.

Other experts said reaching the target will be challenging but achievable.