Nestle expects 2017 margin to decline on higher restructuring costs

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FILE PHOTO: A Kit Kat chocolate bar is seen in this illustration photo taken July 20, 2017. REUTERS/Thomas White/Illustration/File Photo (Copyright Reuters 2017)

Food group Nestle said it expected its operating margin to slip by 40 to 60 basis points in 2017 due to higher restructuring costs and said full-year organic sales growth should be in line with the 2.6 percent seen in the first nine months. Its underlying margin was set to improve.

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Makers of packaged foods are under pressure to review their business models and brand portfolios to satisfy consumers' appetite for fresh, healthy, local foods, while at the same time improving returns to silence increasingly vocal activist investors.

"Our structural savings initiatives are progressing faster than originally planned, leading to an additional increase of 400-500 million Swiss francs in restructuring and related expenses in 2017," the maker of KitKat chocolate bars and Nescafe instant coffee said in a statement on Thursday.

(Reporting by Silke Koltrowitz; Editing by Michael Shields)