Financial results

Nestlé posts Q1 sales increase after divesting US confectionery business

By Douglas Yu

- Last updated on GMT

Nestlé sold its US candy business to Ferrero earlier this year. Pic: Nestlé
Nestlé sold its US candy business to Ferrero earlier this year. Pic: Nestlé
Nestlé has reported 1.4% sales increase during the first three months of 2018 compared to last year, reaching CHF 21.26m ($21.73m).

The company’s organic growth was 2.8%, and was 2.9% excluding its US confectionery business, said Nestlé. Nutella maker Ferrero completed the acquisition​ of Nestlé’s US candy unit earlier this month.

“We are pleased to report a solid start to the year, with all regions contributing to our growth,”​ said Mark Schneider, Nestlé’s CEO. “Our volume growth improved noticeably while pricing remained soft.

“We are encouraged by our innovation pipeline, continued progress with the implementation of our portfolio management strategy and our efficiency initiatives,”​ he said. “Combined with the organic sales development, they put us on track for our 2018 guidance and our 2020 mid-term targets.”

US business returns to growth

“The business in the US returned to positive growth, driven by an improved performance in pet care, particularly in the natural segment and the e-commerce channel. We continued to see strong growth of Coffee Mate,”​ said Nestlé.

“The US confectionery business, which was divested at the end of March, weighed on results for the quarter,”​ it noted.

Even though Nestlé’s organic growth showed positive across all regions, its dollar sales in the Americas declined by 4.2% to CHF 6.8bn ($6.95bn) during the period, primarily caused by the challenging trading environment in Brazil with “soft consumer confidence and deflationary pressures,”​ added the company.

“RIG (real internal growth) was positive but pricing remained negative [in Brazil], following the price reductions taken in the second half of 2017,”​ it said. “Other markets in Latin America sustained good momentum.”

Nestlé’s Q1 sales in EMENA (Europe, Middle East and North Africa) and AOA (Asia, Oceania and sub-Saharan Africa) increased by 6.3% and 2.3% respectively.

Global confectionery sales

Nestlé posted a 3.2% organic growth in global confectionery sales during Q1, reaching CHF 2bn ($2.04bn) compared to CHF 1.95bn ($1.99bn) last year.

The company’s confectionery business boosted its sales in the AOA region specifically.

“Growth in the South Asia region was good, supported by our innovation and renovation pipeline, particularly in Maggi and KitKat,”​ it said.

Nestlé projected its full-year 2018 organic sales growth to be between 2% and 4%.

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