- Nestle's nine-month sales figures released Thursday show 2.6% organic growth through September. Total sales were $66.5 billion, down 0.4% from the first nine months of 2016. The company also said it expected to record 2.6% growth for the full year, down from 3.2% last year.
- The Swiss company said its North American sales were essentially flat, with some growth in coffee creamers and its U.S. frozen food and pizza businesses. These improvements were offset by declines in its confectionery and ice cream operations.
- Mark Schneider, Nestle's CEO, said the sales figures were in line with what the company forecast in July. "Improving our efficiency is a key priority. We have identified further opportunities to accelerate our margin improvement, leading to a further increase in restructuring and related expenses in 2017," he said in a statement.
Nestle has been under pressure from activist investor Daniel Loeb to streamline corporate operations and focus on growth ever since Loeb's Third Point hedge fund bought a $3.5 billion stake in the company in June. Third Point has since outlined several changes Nestle could make, including improving margins, innovating the core business and selling non-core assets. Some investors also suggest the company should sell its frozen food operations, which includes Lean Cuisine and Hot Pockets, as consumers flock to fresher options.
Nestle has struggled like many of its peers with changing consumer tastes and preferences toward healthier, organic and more natural brands. It has done its best to respond, but so far those efforts have failed to yield meaningful results.
Under Schneider's leadership — he has only been CEO since January — the company bought plant-based food maker Sweet Earth and a majority share of the Blue Bottle coffee chain. In addition, it announced it would explore selling its North America confectionery business. That segment includes well-known brands such as Butterfinger, Crunch, Baby Ruth, and is estimated to be worth $925 million. Godiva's parent company passed on bidding, but Hershey and other confectionary makers reportedly are interested.
In June, Nestle announced it was the main investor in the $77 million round of new funding in Freshly, a provider of direct-to-consumer ready meals. It also announced a $21 billion share buyback program and an intention to focus its capital spending efforts on high-growth food and beverage categories such as coffee, pet care, infant nutrition and bottled water.
Since the company's overall economic situation is not expected to show much improvement through the end of this year, Nestle will likely continue to feel the heat from Loeb and other investors who see the the relatively staid company as not agile enough to adequately respond to challenges. If the company sheds its 23% share of cosmetic's maker L'Oreal, and the U.S. confectionery business ends up finding a home elsewhere, that would definitely improve the balance sheet.
These are challenging times for Nestle. Loeb is known for shaking things up at companies in which he invests, so there are likely to be further changes ahead for the Swiss giant — and they may need to happen more quickly than they have so far.