Nestle Q1 Sales Edges Up; Backs FY17 Organic Sales Growth View

20-Apr-2017 - Switzerland

Nestle SA (NSRGY, NSTR.L) reported Thursday slight increase in first-quarter sales, while organic sales growth was strong with improved performance mainly in emerging markets. Further, the Swiss nutrition, health and wellness giant confirmed its fiscal 2017 forecast for organic sales growth.

Mark Schneider, Nestlé CEO said, "Organic growth of 2.3 percent this quarter is within our full-year guidance range. The leap year comparison and other seasonal effects made the start of this year particularly challenging. We were encouraged by the growth in Asia and the resilience of consumer spending in Europe. Consumer demand in the Americas remained soft. Our pricing improved moderately."

Sales for the first-quarter increased 0.4 percent to 21.0 billion Swiss francs from 20.9 billion francs a year ago. Organic growth was at 2.3 percent, with 1.3 percent of real internal growth or RIG and pricing of 1.0 percent. Organic growth was 0.8 percent for developed markets and 4.3 percent for emerging markets.

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In the quarter, sales in zone Americas increased 2.6 percent from last year to 6.4 billion francs. Organic growth was subdued at 0.4 percent owing to a decline in RIG of 1.4 percent. Pricing increased 1.8 percent. Sales in North America declined slightly on an organic basis amid soft consumer demand, while Latin America achieved low single-digit organic growth driven by pricing.

Quarterly sales in zone Europe, Middle-East and North Africa or EMENA declined 6.9 percent to 4 billion francs mainly due to negative foreign exchange impact. Organic growth was solid at 1.7 percent.

Reported sales in zone Asia, Oceania and sub-Saharan Africa or AOA increased 1 percent to 4 billion francs. Organic growth was strong at 4.5 percent. Sales in Nestlé Waters increased 1.1 percent and sales in Nestlé Nutrition edged up 0.2 percent.

Further, the company confirmed its full-year guidance for 2017 and expects organic growth between 2 percent and 4 percent.

The company said it plans to increase restructuring costs considerably in 2017 in order to drive future profitability. As a result, the trading operating profit margin in constant currency is expected to be stable. Underlying earnings per share in constant currency and capital efficiency are expected to increase.

Nestle shares are currently trading at 76 francs, up 1.06 percent. (dpa)

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