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Nestle sees low rise in revenue

NESTLE SA, the world's largest food company, said revenue growth will likely be at the low end of its target range this year as worsening economies make it tougher to push price increases on to consumers.

The Swiss bottler of Perrier water, which yesterday reported a 69-percent rise in 2008 profit on a gain from an asset sale, said it aims for sales excluding acquisitions, disposals and currency swings to climb "at least approaching" 5 percent.

Nestle has a goal for so-called organic growth of 5 percent to 6 percent each year. Analysts expect a 3.7-percent gain in 2009, the slowest in 16 years, according to the median of 11 estimates, Bloomberg News reported.

More United States and European consumers are switching from branded goods such as Nestle's Nescafe instant coffee to cheaper products sold under retailers' own labels. Nestle also said it would trim its buyback to preserve cash.

It's "not quite convincing that the Nestle model will hold" as economies deteriorate, said Andrew Wood, an analyst at Sanford Bernstein, in an e-mailed note. "Nevertheless, these results should land Nestle at the top end of its peer class."

Net income rose to 18 billion Swiss francs (US$15 billion) in 2008 from 10.65 billion francs in 2007, the maker of Purina pet food said. Analysts expected profit of 20.24 billion francs, according to the median of seven estimates.

Nestle gained 9.2 billion francs on July's sale of 25 percent of eyewear maker Alcon Inc for US$10.4 billion.


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