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Strong franc hits Nestlé's first quarter sales

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Strong franc hits Nestlé's first quarter sales
Paul Bulcke: maintains 'organic growth' will improve. Photo: AFP
14:49 CEST+02:00
Nestlé, the world's leading food industry group, saw its sales slide 5.1 percent in the first quarter from the same period in 2013, the Swiss-based company said on Tuesday, blaming the effect of exchange rates and strength of the franc.

During the first three months of the year, the maker of Nespresso capsules and baby food and many other products, said sales totalled 20.8 billion francs ($23.6 billion).

That number was below the expectations of analysts polled by the AWP financial news agency, who had foreseen sales of 21.1 billion francs for the quarter.

Paul Bulcke, CEO of the company headquartered in Vevey in the canton of Vaud, maintained that currency rates were to blame for the drop.

He said Nestlé had seen organic growth of 4.2 percent during the quarter.

"Our organic growth in the first months of the year was in line with expectations and driven by volume rather than price," he said in a statement.

Bulcke confirmed the company's outlook that its performance would pick up in the second half of the year and would outperform the overall market, with organic growth of around five percent.

Nestlé also expects to see improvements in its margins and in its earnings per share not counting exchange rates.

However, Bulcke acknowledged that the company expects "the continued strengthening of the Swiss franc to have a negative impact on reported sales."

In terms of Nestlé's organic growth, emerging markets were once again the driver, surging 8.5 percent during the first three months of the year, while developed markets inched up just 0.6 percent.

Business in the Americas saw 4.1 percent organic growth to 6.0 billion francs during the quarter.

Blistering cold weather in North America at the start of the year impacted sales of Nestlé's cold beverages, the company said, stressing that a range of new products like Girl Scout flavours for Coffee-mate had helped keep sales afloat.

In Europe, sales within the company's structure shrank by 0.8 percent to 3.5 billion francs, Nestlé said, lamenting "deflationary pressures" on the slowly recovering continent, which had forced it to adjust prices downward.

Analysts had expected Nestlé's sales to slip during the first three months of the year, due to the cold-front in the United States and the late arrival of Easter this year.

 

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