February 15, 2018 / 6:40 AM / a month ago

Nestle disappoints in 2017, no intention to increase L'Oreal stake

VEVEY, Switzerland, Feb 15 (Reuters) - Food giant Nestle expects organic sales to grow 2-4 percent this year, it said, after they rose a mere 2.4 percent in 2017, their weakest gain in more than two decades, and a goodwill impairment on its skin health business hit net profit.

The cautious outlook and weak performance are likely to add grist to the mill of activist investor Third Point, which has been pushing Nestle to speed up its transformation into a better-performing health food company.

Nestle said it had decided not to renew a shareholder agreement with L’Oreal, in which it has a 23 percent stake, beyond March 21, to maintain “all available options”, but had no intention to increase its stake and remained committed to the cosmetics company.

Nestle’s organic sales grew 1.9 percent in the fourth quarter to Dec. 31, well below the 2.85 percent forecast in a Reuters poll. Net profit in the full year dropped 16 percent to 7.2 billion Swiss francs ($7.76 billion), well short of the 9.625 billion average poll estimate.

$1 = 0.9275 Swiss francs Reporting by Silke Koltrowitz; Editing by Michael Shields

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