Shares in Nestle rose today (16 February) after the world’s largest food maker issued a solid outlook for 2012 after a year of increased underlying sales and profits. Here is what leading analysts said about the results from the Swiss food giant – and the outlook for the business this year.

Jon Cox, head of European beverage and food research at Kepler Capital Markets

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“Nestlé America’s acceleration in sales in Q4 was the main delta while the improvement in margin in Europe was a surprise for us. However, operating cash flow of CHF9.7bn was some CHF1bn less than we expected. We expect upward revisions in our numbers given we overestimated the impact of below-the-line items. However, while we see Nestlé as a class act, it looks fully valued.”

Jean-Philippe Bertschy, Bank Vontobel analyst

“Phenomenal last quarter for Nestlé with strong volume growth and pricing, driven by the emerging markets. The underlying operating profit margin was down 20bp to 15.8%, in line with expectations, slightly below our forecast. Upbeat outlook in spite of a challenging environment.”

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Andrew Wood, Sanford Bernstein analyst

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“Guidance for 2012 remains fairly positive, even if what Nestle called economic uncertainties and volatility are not expected to be different from recent years. As expected, management reiterated the Nestlé Model of 5-6% organic growth…with constant FX margin growth (unfortunately using trading operating margin) and EPS growth. Overall we believe the market will react well to the strong sales results and positive outlook on 2012, despite the margin miss. However, we remain cautious on sales momentum entering 2012.”

Anonymous analyst

“What I feel strongly about is the guidance on profitability side, because they have guided for an increase in trading operating profit, and at the same time they have guided for an increase in restructuring, and as such, the real on-the-line margin would be up quite significantly. But on the conference call [Nestle] didn’t want to commit to an increase in on-the-line margins, so that is something that I think is interesting.”

Patrik Schwendimann, head of consumer goods equity research, Zürcher Kantonalbank

“Nestlé has communicated the usual target for 2012: organic sales growth of 5 to 6% and an improvement in the EBIT margin in local currencies (Danone is “only” targeting stable margins). It is positive that Nestlé would report a slightly positive currency effect based on current exchange rates. Nestlé reported convincing growth/outlook and is performing better than its competitors.”