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Q1 Results

Nestlé confectionery growth declines in Q1 due to ‘calendar impact’

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By Oliver Nieburg+

21-Apr-2017
Last updated on 21-Apr-2017 at 14:43 GMT2017-04-21T14:43:38Z

Early Chinese New Year and late Easter hit Nestlé's Q1 confectionery sales. ©iStock/robtek
Early Chinese New Year and late Easter hit Nestlé's Q1 confectionery sales. ©iStock/robtek

Nestlé has reported a -2.9% drop in organic growth in first quarter confectionery sales, citing a later Easter and an earlier Chinese New Year this year.

Confectionery was the only of Nestlé’s seven business units to record an organic growth decline during the period (January to March 2017), in the company’s results published yesterday.

Confectionery sales were flat on a like-for-like basis at CHF 1.97bn ($1.97bn) for the quarter.

But Nestlé said there was an organic growth decline of -2.9% and a real internal growth decline of -2.6% for the business unit.

Nestlé’s overall group sales grew 0.4% on a reported basis to CHF 21 billion  ($21bn), representing organic growth of +2.3%.

Early Chinese New Year, late Easter

“Our large confectionery category was impacted stronger than others by the early timing of the Chinese New Year and the late timing of Easter,” said Nestlé CEO Mark Schneider during the company’s earnings call.

Easter 2017 fell on April 16 compared to March 27 last year, while Chinese New Year in 2017 was on January 28 compared to February 8 last year.

Nestlé CFO François-Xavier Roger said this impacted pre-season shipments and hit sales growth in confectionery.

“This is a category that has been the most impacted by the calendar impact,” he said.

Source: Nestlé presentation

Challenging Easter in Brazil

“China has been impacted by the earlier timing of Chinese New Year, particularly for our confectionery franchise at Hsu Fu Chi.

“…Brazil had a difficult quarter particularly in confectionery, which combined with overall fragile economic condition resulting in both negative real internal growth and organic growth,” he continued.

Roger added that the Easter category in Brazil had been under pressure.

“That being said, for confectionery, we have some pockets of good performances with KitKat in Europe and in Japan,” said the CFO.

Nestlé reconfirmed its full-year organic growth outlook of +2-4% for entire group.

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