Nestle Q1 sales organic sales grow

Nestle Q1 sales organic sales grow

Nestle beat expectations when it delivered organic sales growth of 4.4% for the first quarter this morning (17 April). However, many analysts have pointed to disappointing real internal growth – which strips out pricing – and continued sales issues at various units, including US frozen and milk and ice cream products.

Jon Cox, Kepler Cheuvreux

"Group organic sales rose 4.4% (consensus 4.2%) but Americas organic growth decelerated by almost two percentage points to 3.7%, with a slow start in North America on the back of weak frozen, while Latin America was hurt by worsening macroeconomic conditions. Europe was stronger than expected (although there has been some shift with North Africa, as the Middle East now reported in Europe segment) while Asia remained weak (-0.2%), with ongoing weakness in China. Nestle said it expected acceleration in growth in North America, amid innovations, in frozen and also in China, where it was also renovating its portfolio. It reiterated full-year targets."

Andew Wood, Sanford Bernstein

"Nestle’s Q1 organic sales growth was solid and ahead of consensus expectations, with particularly strong growth in EMENA and waters where Nestle almost - but not quite - reached the level of growth delivered by Danone's water arm. Overall organic growth was also well ahead of the Q1 growth delivered by Unilever but was slightly behind Danone. However the beat to expectations was slightly less compelling than that of Unilever given one, it was driven more by price, as volume/real internal growth slightly missed expectations; two, growth in the Americas and in Asia, Oceania and Africa disappointed, with the latter seeing negative growth for the second consecutive quarter as the chronic problems in China continue. And, three, FX impacts were more negative than expected and M&A was less positive, so reported growth missed consensus expectations by some way (+0.5% vs. +1.9%). As expected, management reiterated its FY 2015 guidance. It was a good reporting in that organic growth beat expectations…but there were some worries and disappointments too."

Alain Oberhuber, MainFirst

"Nestle reported slightly higher organic grow rate of 4.4% than market expectation but below our estimates. However, the company grew slower in high margin products like coffee, nutrition and pet food. We have to find out if this could have a negative impact on operating margins for FY15. The company confirmed its guidance for FY 2015 to grow organically by around 5% with improved margins and underlying earnings. Due to a more favourable currency level than previously expected, we will slightly increase our earnings estimates FY15 by around 3%."

Jean-Philippe Bertschy, Bank Vontobel

"Better than expected growth at the higher end of the range the market was expecting. As for Unilever, pricing was however stronger than expected, offseting lower volume growth. We note the ongoing robust growth in the emerging markets of 6.7% (after 7.1% in 4Q14 and 9.7% in 1Q14) as well as in the mature markets. Yesterday, Nestle chairman Peter Brabeck-Letmathe held upbeat statements on Nestle having to adapt to fast-changing consumer behaviour and competitive environment. Expect more action."