Nestle saw weaker organic growth in the first quarter of 2017 than in the corresponding period a year earlier – but the KitKat maker’s underlying sales still came in ahead of consensus analyst expectations.
Nestle’s first quarter organic sales rose by 2.3% year-on-year. Real internal growth, an internal measure used by Nestle to strip out pricing, stood at 1.3% in the three-month period, while price rises contributed 1%. Organic growth was slower than the comparable period of last year, when organic revenue rose 3.9% on a like-for-like basis, and slower than the fourth quarter of last year when it was up 2.9%.
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Nevertheless, Nestle described the performance as “solid”. Mark Schneider, Nestle’s CEO, said: “Organic growth of 2.3% 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.”
Nestle’s organic sales were also ahead of consensus analyst expectations, which were forecasting organic gains of 2%. Jefferies analyst Martin Deboo described this as a “modest” beat, while Andrew Wood of Sanford C. Bernstein said that the result was “slightly ahead” but noted it was still “the weakest quarter of growth this century”.
Nestle’s net sales were also slightly up on last year, increasing by 0.4% on a reported basis. Forex weighed 0.4% on the result, while Nestle’s portfolio streamlining process meant that M&A trimmed 1.5% off the top line.
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On a regional basis, Nestle said that it was “encouraged” by the continued recovery in Asia and resilient consumer demand in Europe but noted weak sales in the Americas region. Schneider noted: “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.”
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By GlobalDataOutlook
Nestle confirmed its full-year outlook for fiscal 2017. “We confirm our 2017 guidance and have made good progress with our growth and efficiency projects to position our company for enhanced value creation,” Schneider said. Nestle has said it expects full year organic growth of 2-4%.
