Nestlé reports first qurter sales decrease by 6.2% to US$21.35 billion

SWITZERLAND – Nestlé has reported 6.2% decrease in total sales for the first quarter of its 2020 fiscal year to CHF 20.8 billion (US$21.35bn), down from CHF 22.2 billion (US$22.78bn) posted in a similar period last year.

The Swiss multinational food and beverage company, however, saw its organic growth reach 4.3% during the period, supported by strong momentum in the Americas (7.4%) and Europe, Middle East and North Africa (7.1%).

Nestlé posted a 4.6% decline in organic growth in the Asia Oceania and sub-Saharan Africa region, mainly due to a double-digit sales decline in China.

By product category, the company’s largest growth contributor was Purina PetCare and its premium brands Purina Pro Plan and Purina ONE. Prepared dishes and cooking aids grew at a high single-digit rate, with improved growth across all brands.

Nestlé’s coffee business saw good momentum, fueled by the demand for Starbucks products, Nespresso and Nescafé. Nestlé Health Science also posted double-digit growth, reflecting elevated demand for consumer and medical nutrition products.

“Our company remained resilient in the first quarter, reflecting our diversified product portfolio and our strong local presence in 187 countries,”commented Mark Schneider, Nestlé CEO.

“However, this crisis is far from over and we will face many uncertainties in the coming quarters. We will continue to adapt quickly to changing consumer needs and to challenges in our global supply chains.”

Looking ahead, the company noted that as it is still too early to assess the full impact of COVID-19, it will maintain the original full-year 2020 guidance “for the time being.”

Portfolio optimization

Nestlé revealed that its has decided to explore strategic options, including a potential sale, for its Yinlu peanut milk and canned rice porridge businesses in China.

The company said that the intention is to ensure the long-term growth and success of the Yinlu businesses, which had sales of US$718 million in 2019.

If the deal closes, the company said that it will retain and continue to invest heavily in its existing Nescafé ready-to-drink coffee business in China.

As part of its portfolio management strategy, during the quarter Nestlé completed the sale of its US ice cream business for US$4 billion to Froneri, the global joint venture that the company operates with PAI Partners.

The company also expects to close the sale of a 60% stake in its Herta charcuterie (cold cuts and meat-based products) business to Casa Tarradellas in the first half of 2020.

In January, the group announced an asset purchase agreement with Allergan to acquire the gastrointestinal medication Zenpep.

With this move, Nestlé said that it aims to expand its medical nutrition business and complement its portfolio of therapeutic products. The purchase of Zenpep is expected to be completed during the second quarter of this year.

In April 2020, the company also announced and completed the acquisition of Lily’s Kitchen, a premium natural pet food business.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.