Fri, Apr 19, 2019 - Page 10 News List

Nestle off to best start in three years

Q1 RESULTS:Recent acquisitions help boost Nestle’s sales, which rose 4.3 percent, while Unilever said its sales were up 3.1 percent, driven by emerging markets in Asia

AFP, ZURICH, Switzerland, and Bloomberg

Nestle SA and Unilever yesterday surprised investors with strong starts to the year, reporting first-quarter sales growth that handily topped analysts’ estimates.

The Swiss maker of KitKat bars and the Anglo-Dutch owner of Dove soap each cited a combination of improved pricing and higher volumes.

Nestle said its sales have climbed, boosted by recent acquisitions, including the right to market Starbucks Corp coffee products in supermarkets around the world.

Despite the overall climate of stagnant consumer spending in industrialized countries and a slowdown in growth in emerging markets, Nestle reported a 4.3 percent rise in sales in the first quarter of this year to 22.2 million Swiss francs (US$22 billion).

Recent acquisitions accounted for 1.2 percentage points of that increase.

In recent years, the company has been under intense shareholder pressure to boost sales and profitability, and has been shaking up its portfolio that includes more than 2,000 brands, including household names such as Gerber’s baby food, Perrier sparkling water and Haagen-Dazs ice cream in addition to its eponymous chocolate.

Nestle, which owns the Nespresso capsule and Nescafe instant coffee brands, has made coffee a key priority in its growth strategy, including the US$7 billion acquisition in August last year of the rights to market Starbucks coffee outside of the chain’s cafes.

The group has in particular sought to expand its coffee presence in the US, where it has bought a majority stake in California-based high-end brand Blue Bottle Coffee and acquired Texan brand Chameleon Cold Brew.

The company confirmed its forecast for higher sales on a like-for-like basis and bigger operating profit margins this year.

The Swiss group was not completely impervious to the sluggishness in consumer spending, being able to increase its sales prices by only 1.2 percent in the quarter.

Unilever reported sales in the first quarter beat analysts’ expectations, with eco-conscious housekeeping products under the Seventh Generation and Omo brands performing especially well.

Gains were driven by emerging markets in Asia, providing some reassurance after the company had warned that Latin America would weigh on its performance this year, the company said.

Underlying sales rose 3.1 percent in the first quarter, the Anglo-Dutch company said.

Analysts expected 2.8 percent.

Unilever said sales were boosted by price increases, some of which were enacted to offset rising commodity costs tied to raw materials in food and petrochemicals used in detergents.

Growth was balanced between volume and price increases, it said.

The company said it still expects growth for the full year to be in the lower half of its 3 percent to 5 percent estimate range.

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