Nestle speeds ups buyback

Nestle SA , the world's biggest food group, said it was speeding up a programme to return spare cash to shareholders as nine-month sales met forecasts and it kept its 2009 outlook unchanged. Skip related content

The firm said its solid performance had allowed it to increase its 2009 buyback to 7 billion Swiss francs (4.2 billion pounds) from 4 billion francs, completing its current 25 billion programme earlier than expected in 2010.

"The board of directors ... reaffirmed its decision to maintain the company's current credit quality for the foreseeable future," Nestle said in a statement.

Sales fell 2.2 percent to 79.5 billion francs. Analysts polled by Reuters had forecast underlying nine months sales growth, which strips out currency effects and acquisitions, of 3.6 percent on total sales of 80.3 billion Swiss francs.

"Unspectacular, but solid. The share buyback is certainly positive but lacking in imagination, if they don't know what else to do with the cash," said one Zurich-based trader.

Nestle did not comment on whether it will exercise an option to sell its 52 percent stake in eye care subsidiary Alcon to Novartis , nor on whether it might enter the fray for Britain's Cadbury , which is being pursued by Kraft Foods .

But it did note that Alcon and its other joint ventures in the pharma sector achieved good growth, with 5.9 percent organic growth to 5.8 billion francs.

Nestle shares have rallied this week on hopes it will sell its Alcon stake to Novartis, which bought 25 percent last year and agreed an option to buy the rest from January next year.

The maker of Nescafe coffee, KitKat chocolate bars and Maggi soup reported volume growth doubled from the first half to 1 percent, compared with analysts' forecasts for 0.9 percent, while sales took a 5.2 percent hit from currency effects.

Nestle repeated its full-year outlook for "volume-driven organic sales acceleration" after it dropped its previous target of "at least approaching 5 percent" in August after reporting disappointing first-half organic sales growth of 3.5 percent.

Nestle's struggling bottled water business saw some improvement, particularly in Europe after a marketing drive, with organic growth down 1.8 percent to 7.2 billion francs, compared with a fall of 2.9 percent in the first half.

The baby milk business, which has also been under pressure, reported volume growth across the globe, helped by investment in innovation and marketing. However Nestle said its U.S. diet food business Jenny Craig was hurt by weak spending.

Nestle's hottest new brand, Nespresso premium coffee capsules, reported 28 percent organic growth.

(Additional reporting by Rupert Pretterklieber; editing by John Stonestreet)