Nestle reports first-quarter sales that beat analysts’ estimates

Nestle, the world's biggest food company, reported first-quarter sales that beat analysts' estimates, buoyed by Nescafe and Nespresso coffee and a faster-than-expected recovery of Maggi noodles in India.

Sales rose 3.9 per cent on an organic basis, the Vevey, Switzerland-based maker of KitKat bars and Perrier water said in a statement Thursday.

Analysts had expected 3.6 per cent, according to the median estimate in a Bloomberg survey. Revenue from powdered and liquid beverages -- predominantly the coffee business - rose 6.3 per cent.

The results are a “modest beat,” Jeff Stent, an analyst at Exane BNP Paribas, wrote in a note.

Still, the first-quarter growth rate is the slowest since 2009 as Nestle has struggled to get consumers interested in frozen pizzas and convenience meals.

The company is pushing into newer areas like medical nutrition and skincare, which promise faster growth.

Nestle’s world-leading coffee business is also facing a fresh challenge from JAB Holding, which has spent more than $30 billion acquiring assets like Keurig Green Mountain.

“Given the disappointments of the last couple of quarters, this is extremely encouraging,” said Jon Cox, an analyst at Kepler Cheuvreux in Zurich.

“It’s being driven by volume so that is indicative of the tough pricing environment.”

Shipments rose 3 per cent, Nestle said. Pricing boosted sales by 0.9 percentage point.

Maggi regained market share in India after last year’s product recall though the comparison with the year-earlier period was difficult, Nestle said.

The maker of Gerber baby food confirmed its forecasts for 2016.

Nestle said in February it expects organic revenue growth to be similar to last year’s 4.2 per cent and below its long-term target because it’s hard to raise prices.

Nestle also said at the time it aims to achieve improvements in margins and underlying earnings per share in constant currencies.

Bloomberg