By John Revill
ZURICH-- Nestlé SA reported Friday first-quarter sales that
missed expectations, but indicated better times might be on the
horizon amid signs of a pickup in hard-hit Europe.
Vevey-based Nestlé said sales rose a slim 0.5% to 20.92 billion
Swiss francs ($21.86 billion) in the three months ended March 31
from 20.82 billion francs a year earlier. Analysts had forecast the
company would post revenue of 21.3 billion francs.
Still, the maker of Kit Kat chocolates and Nespresso coffee
reported a 4.4% rise in organic growth, a widely watched measure
that strips out the impact of currency swings and acquisitions.
That beat analyst expectations of a 4.1% rise.
"Consumer sentiment appears to be modestly increasing" in
Europe, Steffen Kindler, the head of Nestlé's investor relations,
said in a conference call. He highlighted France and Spain as
showing noteworthy improvements.
In a surprise move, later in the day Nestlé announced that
company veteran Nandu Nadkishore, head of its Asia Oceania Africa
zone, was leaving the company to take early retirement after 26
years with Nestlé. The Indian national, who was born in 1958, will
be replaced by current Chief Financial Officer Wan Ling Martello,
who joined Nestlé from Arkansas-based Wal-Mart Stores Inc. in
2011.
Nestlé's performance, which follows similar growth by France's
Danone SA and Anglo-Dutch Unilever PLC, suggests the global food
market is recovering after a shaky two-year stretch. Nestlé has
been fighting tough conditions in developed markets that were hit
by austerity drives and feeble economic growth, which it has tried
to offset by expanding in developing markets, such as China and the
Philippines.
Volatile currency markets also hit Nestlé, the world's biggest
food company by revenue, stripping 4.5% from overall sales. The
strong Swiss franc, which has surged 15% versus the euro this year,
reduces Nestlé's overseas sales when translated into francs.
Nestlé doesn't report earnings for the first quarter.
Reported sales in Nestlé's Europe, Middle East and North Africa
zone, which was set up at the end of last year, fell 7.5% but still
beat expectations of 3.74 billion francs. The region, which now
includes the Middle East and North Africa, was affected by currency
fluctuations, Nestlé said.
Asia Oceania Sub-Saharan Africa, which makes up around 17% of
Nestlé's sales, posted flat reported sales, a performance the
company pinned on a slow start in China, its second-largest market.
Sales of the company's Yinlu foods division, which makes peanut
milk and rice porridge, as well as wafers and coffee, struggled
amid changing consumer preferences.
In China, Nestlé is launching new products like a Yinlu premium
protein drink and bolstering advertising. It expects a "gradual
recovery."
In the U.S., the company's frozen food business posted slight
improvements. Its Lean Cuisine entrees business and its pizza
businesses, which includes DiGiorno and Tombstone pizza, are still
challenged, Mr. Kindler said.
Chief Executive Paul Bulcke said the start of 2015 met
expectations and that the food giant was able to increase prices in
many markets.
Mr. Bulcke said Nestlé had continued its efforts to "restore
momentum" in its Asia Oceania Africa and Americas regions, where
organic growth eased during the quarter and expected to see results
throughout the year. The company maintained its guidance for
organic sales growth of "around 5%" for the full year.
Write to John Revill at john.revill@wsj.com
Access Investor Kit for NESTLE SA ORD REG
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=CH0038863350
Access Investor Kit for NESTLE SA ORD REG
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US6410694060
Access Investor Kit for Wal-Mart Stores, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US9311421039
Subscribe to WSJ: http://online.wsj.com?mod=djnwires