Quarterly turnover below Nestlé's expectations

Quarterly turnover below Nestlé's expectations

A 4.2 % organic growth represents a slight under-performance for Nestlé's first quarter, which had hoped for 5 % for the full year. The strong Swiss Franc pushed turnover down 5 % to 20.8 billion Francs (some 17.1 billion euro).

Europe struggles

Nestlé splits its turnover numbers in six separate segments: three geographical zones (Europa, Americas and Asia-Oceania-Africa) and three business units (Nestlé Waters, Nestlé Nutrition and a threesome of other activities like Nespresso). In general, the latter three grow much faster.

 

Europe remains a problem child for Nestlé as its organic turnover dropped 0.8 % to 3.53 billion Francs. Spain and Portugal show "encouraging early signs of recovery", while "France, Germany and the United Kingdom had a slower start to the year". Russia plows ahead in Easter Europe but the rest of the region was "affected by the current instability and uncertainties".

 

Asia, Oceania and Africa had the largest autonomous growth (+ 5.3 %) to 4.44 billion Francs, while the Americas also performed admirably with + 4.1 % and are still the strongest region with 6 billion CHF.

 

The three business units perform well above the regions, with Nestlé Waters up 6.2 % to 1.6 billion Francs, Nestlé Nutrition up 6.4 % to 2.3 billion Francs and threesome Nestlé Professional - Nespresso - Nestlé Health Sciences up 6.4 % to 2.9 billion Francs.

 

2014 outlook confirmed

The 4.2 % organic growth is the weakest quarterly performance since 2009, while 2013 can be considered as a weak year in general. "Our organic growth in the first months of the year was in line with expectations and driven by volume rather than price", CEO Paul Bulcke explained the numbers.

 

He did confirm his outlook for 2014 as a whole: an autonomous growth of around 5 % and an improvement in margins and the underlying profitability, despite the "continued strengthening of the Swiss Franc".

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