KitKat maker Nestle misses forecasts as profit falls

Nestle said it would increase restructuring costs to around 500 million Swiss francs ($498 million) this year and so expected a stable trading operating profit margin in 2017.

The Nescafe coffee and Kitkat candy bar maker is looking to have growth in underlying sales of 2% to 4% in 2017, which is below estimates by analysts and the long-time Nestle Model of 5% to 6% growth.

Net profit at the maker of Kitkat chocolate bars and Nescafe instant coffee fell to 8.5 billion francs previous year, well short of the average estimate for 9.59 billion francs in a Reuters poll of analysts, hit by a one-off non-cash adjustment to deferred taxes.

Growth in emerging markets slowed to 5.3 percent from 7.0 percent a year ago, hit by continuing problems at the Yinlu drinks business in China.

"Our 2016 organic growth was at the high end of the industry but at the lower end of our expectations", said chief executive Mark Schneider.

Nestle had previously set itself a target of organic growth of five-to-six percent, but has scaled back those ambitions in recent years in face of sluggish consumption in Europe and the United States and a slowdown in growth in emerging economies.

Nestle said pricing improved in the second half of last year and should continue to do so this year.

Those include deflation in Europe, slowing infant formula sales in China, inflation in Brazil and Russian Federation, and increasing competition in the United States chocolate market.

Nestle, the largest packaged food company in the world, posted sales for 2016 of 89.4 billion Swiss francs, which represented an increase of 3.2%.

Vanessa Coleman

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