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Nestle expects pick up in sales

Tuesday, April 15 07:50:36

Nestle expects sales growth to pick up in the next few quarters after slowing to 4.2 percent in the first quarter as unusually cold weather subdued sales in North America and cost-conscious Europeans continued to opt for cheaper brands.

The maker of Maggi soups and Nescafe instant coffee is facing hard times, with sluggish growth in emerging markets no longer making up for weak sales in the developed markets that account for most of its business.

Nestle said rolling out new products had helped sustain growth amid difficult market conditions, adding that it would keep innovating and supporting its brands.

"We confirm our full-year outlook: performance will be weighted to the second half, outperforming the market, with organic growth around 5 percent," the world's biggest food group said in a statement on Tuesday.

Sales in local currencies in the first quarter rose to 20.8 billion Swiss francs ($23.66 billion), short of the 21.46 billion francs forecast made in a Reuters poll. Sales fell 5.1 percent in Swiss francs, hit by the relative strength of the Swiss currency.

The first quarter's organic growth of 4.2 percent, which strips out currency moves and acquisitions, was just ahead of the 4.1 percent forecast in the poll, but below 4.3 percent in the same year-ago period and 4.6 percent for the whole of 2013.

Nestle said quarterly sales were hit by several one-off events, including the extreme cold in the United States which made people shop less. Chocolate sales were also weaker in the first quarter because Easter this year falls in April, instead of March, which drove consumers to postpone purchases.

Nestle generates a quarter of its overall sales in the United States. In the Americas, sales grew 4.6 percent, helped by strong demand for soluble coffee and pet food in Latin America.

Sales in Europe grew only 0.3 percent, as prices continued to fall, while Asia, Oceania and Africa saw growth of 7.3 percent. ( C ) Reuters