Nestle posts solid first quarter sales but faces frozen meals, Asian challenges

Swiss-based Nestle SA, the world’s biggest food maker, has reported first-quarter revenue growth that exceeded estimates as price increases offset weak sales of frozen convenience meals such as Lean Cuisine in North America.

Nestle posted organic sales growth (less acquisitions, divestments & currency shifts) of 4.4% percent to CHF 20.9 billion (US$21.8bn). Price contributed 2.5% percentage points of the growth, with organic growth in developed markets 2.5% and emerging markets 6.7%.

Paul Bulcke, Nestle CEO said: Our three-month sales growth was in line with expectations and driven by both real internal growth and pricing.

Our full-year outlook is confirmed – we aim to achieve organic growth of around 5% with improvements in margins, underlying earnings per share in constant currencies and capital efficiency.

Better than expected organic growth of 5.3% in Europe, Middle East and North Africa was led by Petcare, Nescafe Dolce Gusto and ambient culinary and confectionery.

North America posted 3.7% organic sales growth but was challenged by the frozen meals category, especially Lean Cuisine, with frozen foods repositioned to regain momentum in the category.

A major negative for Nestle was Asia, Oceania and Africa, due mainly to a slow start by China with the region posting 0.2% organic sales growth. Japan grew dynamically, helped by continued good growth momentum in KitKat.

The Nestle Waters division reported 7.3% organic sales growth to CHF 1.7 billion, with double-digit growth in emerging markets and mid-single-digit growth in developed markets.

There was further growth acceleration for Nestl Pure Life. The premium international brands Perrier and S.Pellegrino continued their good growth momentum in North America, Europe and the rest of the world, Nestle said.

In other businesses, Nespresso continued to grow well in a competitive market. Leading segments (organic growth) by product were nutrition & health sciences, up 7.7%; water, up 7.4%; and confectionery, up 7.5%.

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top