Nestle reports a 2.8% organic growth with sales increase to US$22b

SWITZERLAND – Nestlé S.A, the Swiss transnational food and drink company has reported 2.8% organic growth, starting the year with 1.4% increase in sales to US$22billion.

In 2018, Nestle is looking forward to 2-4% growth in organic sales, US$723 million in restructuring costs and increase its underlying earnings per share in constant currency and capital efficiency.

“We are encouraged by our innovation pipeline, continued progress with the implementation of our portfolio management strategy and our efficiency initiatives.

Combined with the organic sales development, they put us on track for our 2018 guidance and our 2020 mid-term targets,” said Mark Schneider, Nestlé CEO.

Organic growth was seen in most of its businesses except the US confectionery business which it sold to Ferrero for US$2.8 billion in cash to allow it invest and innovate across a range of categories including pet care, bottled water, coffee, frozen meals and infant nutrition.

In March, the company completed the acquisition of Atrium Innovations for US$2.3 billion in cash and this together with other acquisitions; Nestle said increased sales by 0.2%.

All other categories including petcare, coffee and Nestlé Health Science made a lead in good performance, although impacted 1.6% by foreign exchange.

Group sales grew 1.2%, boosted by high growth in sales in the US, negatively impacted by price reductions especially in Brazil.

Nestle said net divestments reduced sales by 0.1%, which were further affected 5.3% by foreign exchange.

In the US, petcare led positive growth in group sales especially the natural segment and the e-commerce channel, while Coffee Mate showed continued growth.

While other markets in Latin America sustained good performance, Brazil was faced with a challenging trading environment coupled with soft consumer confidence, deflationary pressures and negative pricing.

It reaped well in sales from Zone Europe, Middle-East and North Africa (EMENA) which posted 2.2% organic growth, 2.6% (Real Internal Growth) RIG impacted by negative pricing in Western Europe.

Strong RIG was a result of good growth in pet care, particularly in Russia, and in coffee, which benefited from the successful relaunch of Nescafé Gold in the UK.

Middle East, Central and Eastern Europe performed well in the dairy and infant formula segment with pricing pressure broad-based across categories, mainly in coffee following increasing in prices.

4.7% organic growth was witnessed in Zone Asia, Oceania and sub-Saharan Africa (AOA), China saw strong growth, boosted by the timing of Chinese New Year with good growth in South Asia supported by innovations, particularly in Maggi and KitKat brands.

In Sub-Saharan Africa, there was high single-digit growth, developed markets were positive, with good RIG and pressure on pricing.

Nestle Waters reported 2.9% decline in sales to US$1.75bn attributed to inclement weather, impacting demand and distribution across Europe and North America.

In what Nestle referred to as emerging markets, sales were weaker especially in China, Brazil while international premium brands, S. Pellegrino and Perrier, continued to be the key driver of Nestlé Waters worldwide, posting high single-digit growth.