KitKat-maker Nestle plans restructuring after fall in profits
KitKat and Nespresso-owner Nestle is eyeing a major restructuring drive to shore up profits after missing forecasts and taking a hit from a sluggish performance in China.
The Swiss food and drinks giant saw net profits slide 6% to 8.53 billion Swiss francs (£6.8 billion) in the year ending December 2016, down from 9.06 billion Swiss francs (£7.2 billion) for 2015.
Annual organic growth failed to meet the firm's expectations, edging down to 3.2%, from 4.2% in 2015.
Nestle said in October last year that annual organic growth was on course to hit 3.5%.
Revenues rose 0.8% to 89.47 billion Swiss francs (£71.4 billion) over the period, but it had to stomach a double-digit decline from Chinese food company Yinlu, in which Nestle took a 60% stake in 2011.
Chief executive Mark Schneider, who joined the firm on January 1, said last year's organic growth was at the "high end of the industry but at the lower end" of expectations.
"We saw a solid trading operating profit margin improvement and our cash flow grew significantly. Based on these results, our board of directors is pleased to propose the 22nd consecutive dividend increase, underlining our commitment to continuity.
"In order to drive future profitability, we plan to increase restructuring costs considerably in 2017."
Nestle, which is seeking "significant structural cost savings" by 2020, trimmed its sales target to between 2% and 4% for 2017.