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Nestle First-Quarter Sales Beat Estimates on Higher Prices

Published on Apr 17 2015 12:41 PM in A-Brands tagged: Featured Post / Nestlé / Unilever

Nestle First-Quarter Sales Beat Estimates on Higher Prices

Nestle, the world’s biggest food maker, followed European peers in reporting first quarter revenue growth that exceeded estimates as price increases offset weak sales of convenience meals in North America.

Organic sales rose 4.4 per cent, with pricing contributing 2.5 percentage points of the growth.

Unilever and Danone have also topped first quarter predictions as business in Europe starts to improve after an economic slump. The rebound in Nestle’s home region comes as it faces a sluggish Chinese market and seeks to revive the ailing Lean Cuisine frozen-food brand in North America.

“The beat to expectations was slightly less compelling than that of Unilever given it was driven more by price,” said Andrew Wood, an analyst at Sanford C. Bernstein, said.

“The big negative is Asia, Oceania and Africa,” said Jean-Philippe Bertschy, an analyst at Bank Vontobel AG in Zurich. “That’s going really poorly.”

Chairman Peter Brabeck-Letmathe said Thursday the Nespresso maker needs to speed up structural changes as industry mergers and acquisitions threaten to heighten competition.

“We shall see how Nestle’s frozen-food initiatives turn out, but if it doesn’t improve by the end of the year, I think it’s possible Nestle could sell parts of the business or even the whole block of it in a monster deal,” Bertschy said.

Total revenue rose to 20.92 billion francs, missing the 21.2 billion franc median estimate of analysts polled by Bloomberg as growth was almost wiped out by declines of currencies against the Swiss franc. Nestle’s definition of organic growth excludes acquisitions, divestments and currency shifts.

Bloomberg News, edited by ESM

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