Nestlé, the world’s largest food company, reported its weakest sales growth in 20 years as a result of weaker than anticipated price rises in its product range and the continued sluggishness in the global economy.

The Swiss-headquartered company reported sales of €84bn for its 2016 financial year, which was just 0.8% ahead of the previous year in constant currency terms. However, underlying organic sales growth was reported as 3.2%, which is the lowest rate of growth the company has delivered since the 1990s.

Nestlé chief executive Ulf Mark Schneider told investors there was no beating around the bush and the sales had come in “lower than we expected”.

Despite the weak sales result, Nestlé delivered an operating profit growth of 2.3% to more than €12.8bn. Profit margins in the overall business were expanded to 15.3% as a result of continued cost cutting and restructuring. Net debt at year end December 2016 stood at just over €13bn, which is down €1.4bn on the previous year.

By division

Nestlé’s milk and ice cream division, which accounts for almost a fifth (19%) of the overall business, reported sales of €13.4bn in 2016. Operating profits in the division stood at €2.4bn, as profit margins expanded 150 basis points to 18.4%.

Nestlé is also a major player in the infant formula and baby powder market. Last year, its nutrition and health division reported sales of more than €14bn. Operating profits stood at €2.6bn, although margins shrunk by 110 basis points to 18.5%. Nestlé’s infant formula division accounts for 20% of its overall business.

Nestlé in Ireland

While not always the most visible, Nestlé has a significant footprint in Ireland since it acquired the Wyeth Infant Nutrition business in 2012 for more than €11bn. Nestlé Wyeth’s manufacturing facility is located in Askeaton, Co Limerick, and produces a range of premium powdered milk-based products for infants, young children and mothers for export to world markets.

The Wyeth Ireland business had sales of just over €584m for its 2015 financial year. Operating profits for Wyeth Ireland were just under €204m, giving the business a 35% operating profit margin. The company employs over 600 people at the Askeaton facility.