Nestlé sales fall despite strong Oceania performance
The world’s largest food group has reported a 2.1% decline in sales as currency fluctuations counter organic growth at Nestlé.
The company once again saw bottled water sales decline as European demand remained subdued. Despite this, overall organic growth was a robust 3.8%.
Paul Bulcke, CEO of Nestlé, was confident that momentum was beginning to develop around initiatives they had only recently implemented.
“The Group achieved positive organic growth in the first quarter of 2009, despite tough comparisons with Nestlé’s near 10% organic growth over the same period last year,” he noted. “Our response to the challenging economic environment in 2009 has been to seize new opportunities, accelerating key initiatives in areas such as product affordability, innovation and renovation, as well as cost efficiencies. The increasing momentum from such initiatives, as well as the strength of our brands and our worldwide geographic presence, enables me to confirm our guidance for 2009 as a whole.”
In the first quarter of 2009, the organic growth of Nestlé’s total Food and Beverages business was 3.6%, with 0.7% in Europe, 5.0% in the Americas and 6.5% in Asia, Oceania and Africa.
Asia, Oceania and Africa
Sales of CHF 3.7 billion ($4.49b) and 5.8% organic growth were recorded. The vast majority of the Zone’s emerging markets achieved positive organic growth despite lower reported pricing, the Swiss-based manufacturer said. Amongst the developed markets, the company singled out Oceania as a strong performer. Overall, soluble coffee, petcare and confectionery were the growth leaders.
Nestlé Waters, Milk Products and Ice-Cream and Nutrition were the only three food and beverage divisions that failed to record organic growth for the quarter. The “continued adverse trend in the bottled water industry, particularly in Western Europe and the home-and-office segment in North America”, was blamed for the soft result in water. While weak growth in the European infant nutrition business and softer market conditions in the US – particularly affecting Jenny Craig – saw growth in Nutrition stagnate.
Milk products and ice-cream struggled to match the exceptional result of the first quarter of 2008, when organic growth reached 16.0%.
“In the dairy category, currency devaluations in some emerging markets created pricing pressure and impacted demand,” the company advised in a statement. “However, the category continued to benefit from a multi-tier strategy with products adapted to different affordability levels and nutritional needs. Ice cream was strongly impacted by reduced out-of-home consumption as well as a late start to the season in Europe.”
Powdered and Liquid Beverages and Petcare were the two shining lights for the company, with organic growth of 9.7% and 11.5%, respectively. Nescafé, Milo, Nespresso and Nesquik were all strong performers as the group reaped double digit growth in the Americas and Asia, Oceania and Africa.
Prepared dishes and cooking aids and Confectionery remained solid contributors to the group led by brands of the ilk of Maggi, Lean Cuisine and Kit-Kat.
“Nestlé’s first-quarter sales performance of 3.8% organic growth, combined with the expected benefits from several initiatives already in progress in the markets and product groups, enables us to confirm our guidance for 2009: organic growth at least approaching 5% together with a further improvement of the EBIT margin in constant currencies,” the food group concluded.
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