Nestlé Struggles Amid Changing Tastes and Sluggish Economic Growth
April 20 2017 - 3:39AM
Dow Jones News
By Brian Blackstone
Nestlé SA said Thursday that first-quarter revenues were largely
flat from one year earlier, due partly to weakness in North
America, as the consumer goods giant confronts sluggish global
growth and changing consumer tastes.
Revenue in the three months from January to March was 21 billion
Swiss francs ($21 billion), compared with 20.9 billion Swiss francs
in the first quarter of 2016. Organic growth, which strips out the
effects of currencies, acquisitions and divestments, was 2.3%.
The results underscore the challenges Nestlé and other consumer
goods companies face, including insipid economic growth,
difficulties raising prices and consumers increasingly favoring
locally grown, organic food.
Weakness in Nestlé's confectionery business, which includes
Crunch bars, Kit Kats and Cailler chocolate, weighed on overall
organic sales. Analysts had expected some softness due to the late
Easter holiday, which pushed some holiday-related spending into the
second quarter.
Nestlé Chief Executive Mark Schneider added that the leap year
in 2016, which led to an extra sales day in February that year,
made annual comparisons harder.
Analysts had expected first-quarter revenue of about 21.3
billion francs, according to FactSet. Organic sales growth was
expected by analysts to come in at around 2%.
Organic sales were weak in the Americas, rising by just 0.4%,
and they rose 0.8% for developed markets overall. In contrast,
comparable sales were up 4.3% in emerging markets, with robust
growth in Southeast Asia and parts of Africa.
Nestlé previously targeted 5% and 6% annual organic growth, but
Mr. Schneider ditched that target in mid-February, about six weeks
after taking the company's helm.
On Thursday, Nestlé reaffirmed it expected organic growth of
between 2% and 4% in 2017. A more flexible mid-single-digit
objective won't kick in until 2020. The company missed the 5% to 6%
target for four years running, through to 2016.
Write to Brian Blackstone at brian.blackstone@wsj.com
(END) Dow Jones Newswires
April 20, 2017 03:24 ET (07:24 GMT)
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