Nestle raises FY goals as growth beats poll

The world's biggest food group Nestle on Thursday upped its sales growth outlook for the year after price hikes and strong demand in emerging markets helped its underlying sales rise more than expected in the first nine months of 2011.

Underlying sales at the maker of KitKat chocolate bars, Nespresso coffee capsules and Maggi soups rose 7.3 per cent, down from 7.5 per cent in the first half, but beating forecasts for a 7.1 per cent rise in a Reuters poll.

"For the year as a whole, in spite of input cost pressures, we expect to slightly over-perform against our long-term organic growth range of 5-6 per cent," Chief Executive Paul Bulcke said in a statement.

Europe's big food groups have so far been able to shrug off deteriorating consumer sentiment in mature markets thanks to buoyant demand in emerging markets and margins are set to benefit from price hikes and easing commodity cost pressures.

French yoghurt maker Danone on Tuesday reported better than expected third-quarter underlying sales growth and gave a confident outlook for 2012, citing softening commodity prices and robust growth in emerging markets.

Nestle shares, which have lost about 6 percent so far this year, compared with a 3.6 per cent drop in the STOXX 600 Europe food & beverages index , trade at about 15.9 times estimated 2012 earnings, at a premium to Danone on 14.4 and Unilever on 14.1.