Nestlé has reported that its 9-month sales have risen organically by 4.4% to CHF 68.4 billion, including growth of 8.8% in emerging markets.
“Our real internal growth has regained momentum and is broad-based across categories, price points and geographies,” said Paul Bulcke, Nestlé CEO. “Most notably, Europe continues to grow and Asia and Africa have picked up speed. Today’s challenging environment is the right time for us to further reinforce the fundamentals of our business: those which drive growth like innovation, distribution and consumer engagement, and those which drive operational performance like strengthening our portfolio, improving our resource allocation and increasing our structural efficiency. We expect our continued growth momentum to enable us to deliver around 5% organic growth for the full year together with an improvement in margins and underlying earnings per share in constant currencies.”
In the first nine months of 2013, Nestlé’s sales increased by 4.0% to CHF 68.4 billion, impacted by negative foreign exchange of 2.5%. Organic growth was 4.4%, composed of 3.0% real internal growth and 1.4% pricing. Acquisitions, net of divestitures, added 2.1% to sales.
North America continued to grow despite the tough economic environment, the company said. In the frozen food category Stouffer’s frozen meals did well and there were further share gains forDiGiorno pizza. Lean Cuisine, which introduced Honestly Good, was affected by the continued contraction of the category. The premium segment was challenging for ice cream but there was strong growth in snacks and super premium, due in part to the new Häagen-Dazs Gelato Pints. Confectionery delivered growth and share gains. Soluble coffee and creamers continued to do well, with the recently launched Girl Scouts line driving growth for Coffee-Mate.
The slowdown in the economies of Latin America continued, mainly the result of inflationary pressures. Nestlé said that its business was resilient with a majority of categories growing, half of them double-digit, helped by pricing. In Brazil ambient dairy performed well with cereals a highlight and, in chocolate, Kit Kat continued to deliver strong double-digit growth. In Mexico the ambient dairy and culinary businesses performed well. Nescafé Dolce Gusto achieved very strong growth in both Brazil and Mexico. Petcare made a strong contribution to the region’s growth momentum.
In Western Europe the Great Britain region, Germany, Switzerland and Austria were highlights. Southern Europe remained challenging although Portugal showed signs of improvement.
In Central and Eastern Europe the economic situation was also difficult, said the company, but Russia continued to deliver strong growth underpinned by good performances in ice cream, coffee and confectionery.
Nescafé Dolce Gusto gained market share with double-digit growth. Nesquik also delivered good results. Confectionery built upon its solid start to the year with Kit Kat a highlight. In soluble coffee Nescafé Gold achieved strong volume growth. Frozen pizza recovered market share. There was a short season for ice cream which had an impact.
Asia, Oceania and Africa saw growth accelerated despite the continuing general economic slowdown across the emerging markets and local conflicts and civil disturbances that disrupted several markets.
Central and West Africa and Indonesia grew double-digit while the Middle East region, India, Malaysia each achieved strong single-digit growth. China continued to grow in a somewhat slower trading environment. All categories performed well with the highlights ready-to-drink, powdered beverages and ambient dairy. The Alpino chocolate brand was launched successfully in India as part of efforts to develop the premium segment. Nescafé Dolce Gusto continued to grow double-digit as its roll-out continued in the zone.
Nestlé Waters delivered broad-based growth despite the intense competitive environment with a rebound in Europe and sustained growth in North America and the emerging markets.
In North America growth was driven by Nestlé Pure Life and the continued strong performance in the premium brands S.Pellegrino and Perrier.
The performance in Europe improved with market share gains helped by promotional activity in difficult trading conditions. The premium brands S.Pellegrino and Perrier also did well.
In the emerging markets Latin America and Asia grew double-digit and the Middle East achieved healthy growth. Nestlé Pure Life as well as local brands such as Erikli, Al Manhaland Ciego Montero contributed.
Nestlé Nutrition saw 6.6% organic growth, with sustained momentum in formulas and cereals. There were strong performances in emerging markets where growth was double-digit. The US was also a highlight for formula with innovation in both the premium and value segments driving double-digit growth. Meals and drinks enjoyed good performances in the US pouch segment and Russia, which were offset by softer growth in Europe. Wyeth Nutrition continued to perform in line with expectations with Illuma and Gold driving growth.
Weight Management continued to be challenged and Performance Nutrition was repositioned to better focus on its core customer base.
Nestlé said that it expected that its continued growth momentum would enable it to deliver around 5% organic growth for the full year together with an improvement in margins and underlying earnings per share in constant currencies, as well as an improvement in capital efficiency.
Source: Ingredients Network