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4-Traders Homepage  >  Equities  >  Swiss Exchange  >  Nestlé    NESN   CH0038863350

NESTLÉ (NESN)

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Nestle settles for modest sales growth target after Q1 slowdown

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04/20/2017 | 09:44am CEST
The Nestle logo is pictured on the company headquarters entrance building in Vevey

Swiss food giant Nestle maintained its modest 2-4 percent growth target for underlying sales this year, slightly less than Anglo-Dutch rival Unilever (>> Unilever plc), after growth in the first quarter was hit by weak consumer demand for packaged foods in North America and weaker prices in western Europe.

Swiss food giant Nestle maintained its modest 2-4 percent growth target for underlying sales this year, slightly less than Anglo-Dutch rival Unilever (>> Unilever plc), after growth in the first quarter was hit by weak consumer demand for packaged foods in North America and weaker prices in western Europe.

Comparable or organic sales growth at the maker of Buitoni pasta and Maggi soups slowed as expected to 2.3 percent in the first quarter, from 3.9 percent in the same period last year, when there was one more trading day and an earlier Easter, the company said in a statement on Thursday.

It also reaffirmed new Chief Executive Mark Schneider's forecast given in February of 2-4 percent organic sales growth, a stable operating profit margin and an increase in underlying earnings per share in constant currencies this year.

Earlier on Thursday Unilever (>> Unilever) reported underlying first-quarter sales growth of 2.9 percent, helped by some higher prices, and said it aimed for 3-5 percent growth this year.

Volume growth at Nestle decelerated to 1.3 percent, from 3 percent a year ago, hit by soft demand in North America and China, while the overall increase in prices edged higher to 1 percent, from 0.9 percent.

Underlying sales by the company's confectionery business declined 2.9 percent, due to the later Easter holiday and weaker demand for chocolate, and its Yinlu drinks business dragged down its performance in China.

Nestle said pricing was still negative in western Europe, but the trend was improving thanks to increases in prices for the group's flagship Nescafe products.

Nestle's overall sales increased to 21 billion Swiss francs (£16.45 billion) from 20.9 billion last time, just short of the average of analysts' forecasts of 21.2 billion francs given in a Reuters poll.

Analysts said Nestle's quarterly growth was the lowest in more than a decade but they expected the situation to get better, with Kepler Cheuvreux analyst Jon Cox pointing to an improvement in Europe and Asia.

Helvea Baader analyst Andreas von Arx said the pricing trend was good news and should help the share price, which was up 1.1 percent at 76 francs by 0730 GMT, when London-listed shares in Unilever were up 1.4 percent at 3,994 pence.

(Editing by Greg Mahlich)

By Silke Koltrowitz

Stocks treated in this article : Unilever, Nestle SA, Unilever plc
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Financials ( CHF)
Sales 2017 91 737 M
EBIT 2017 14 237 M
Net income 2017 10 137 M
Debt 2017 11 210 M
Yield 2017 2,92%
P/E ratio 2017 24,71
P/E ratio 2018 22,74
EV / Sales 2017 2,91x
EV / Sales 2018 2,77x
Capitalization 255 508 M
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Mean consensus OUTPERFORM
Number of Analysts 28
Average target price 82,7  CHF
Spread / Average Target 0,71%
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NameTitle
Ulf Mark Schneider Chief Executive Officer & Director
Paul Bulcke Chairman
Magdi Batato Executive Vice President & Head-Operations
François-Xavier Michel Marie Roger Chief Financial Officer & Executive Vice President
Stefan Catsicas Chief Technology Officer & Executive VP
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