Nestle cautions on margins as it raises sales target

The world’s biggest food group Nestle said weakening consumer sentiment in developed markets would make it harder to improve margins as it raised its sales growth outlook for 2011 after beating forecasts for the first nine months.

The Swiss company said price hikes and strong demand in emerging markets allowed it, like other big European food groups, to make up for weakening consumer sentiment in the mature markets of Western Europe and the United States.

The maker of KitKat chocolate bars and Nespresso coffee capsules softened its optimism about margins, however, saying it was looking for an increase this year following a more confident tone at its half-year results in August

“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 and continue to strive for a margin improvement in constant currencies,” chief executive Paul Bulcke said in a statement on Thursday.