NSRGY Nestle SA (PK)

By Brian Blackstone and Anthony Shevlin 

ZURICH-- Nestlé SA saw a pickup in North American sales led by price increases and pet care, as the Swiss consumer goods giant posted first-quarter growth that exceeded analysts' expectations.

Nestlé said sales for the period were 22.18 billion Swiss francs ($21.98 billion) compared with 21.26 billion francs in the first quarter of 2018. On an organic basis, sales rose 3.4%, above the 2.8% gain analysts had expected, according to estimates compiled by the company.

The results were "at least modestly positive," said Jefferies' analyst Martin Deboo. Nestlé shares were up 1.3% in early trading Thursday.

Organic sales in the Americas rose 3.4% in the first quarter to 7.51 billion francs, Nestlé said, up from last year's growth rate of 2%. The gain was driven by a "significant" improvement in pricing in the U.S., its biggest market, and Brazil. Prices across regions increased 1.2% in the first quarter.

The sales boost puts Nestlé on track to achieve its goal of reaching sales growth rates in the mid to single digits by 2020. Two years ago, the company abandoned its longstanding organic growth target of 5% to 6% after Chief Executive Mark Schneider took the helm at the start of 2017. It has a huge portfolio of products, ranging from Maggi noodles to Purina pet food and DiGiorno frozen pizza.

The early months of 2019 saw a pause in Nestlé's acquisitions and divestments after an active 2018 when the company sold its U.S. confectionery business to Italian candy maker Ferrero International SA and purchased the rights to offer Starbucks Corp.'s coffee and tea products in grocery and retail stores for more than $7 billion. Nestlé said it launched 24 coffee products under the Starbucks brand during the first quarter.

The company said its portfolio management is "fully on track" with the strategic reviews of its skin-health and Herta cold-cuts businesses to be completed by mid and late 2019, respectively.

Nestlé confirmed its guidance for the year, with continued improvement in organic sales growth and underlying trading operating profit margin.

The company expects underlying earnings per share at constant currency rates and capital efficiency to increase as part of its 2020 targets.

The company's waters division was one weak spot with organic growth of just 2% last quarter. Sales in Europe were down due to weakness in the U.K. and Germany.

Nestlé "needs to find a solution here," said Mr. Deboo.

Write to Brian Blackstone at brian.blackstone@wsj.com

(END) Dow Jones Newswires

April 18, 2019 04:07 ET (08:07 GMT)

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