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Nestle Sales Growth Slips as Emerging Markets Slow

April 18, 2013
The company noted 'contrasting trading conditions across different regions,' with robust 8.4% growth in emerging markets, but just 0.9% growth in developed markets.

ZURICH -- Nestle (IW 1000/37), the world's leading food industry group, released on Thursday first-quarter sales figures that missed analysts' forecasts as growth slowed in emerging markets.

In the first three months of the year, Nestle's sales rose by 5.4% to 21.9 billion Swiss francs (US $23.6 billion).

Nestle said the figures showed that the group was in line to perform as expected in 2013, but analysts polled by financial news agency AWP felt they were a disappointment, given expectations of 22.5 billion Swiss francs in sales.

"The start to the year reflects the caution we expressed in February," Nestle chief executive Paul Bulcke was quoted as saying.

The maker of Nespresso capsules, among many other things, said it had recorded organic growth of 4.3% during the first quarter, missing its long-term objective of between 5% and 6%.

Nestle noted "contrasting trading conditions across different regions," with robust 8.4% growth in emerging markets, but just 0.9% growth in developed markets.

All was not rosy in emerging markets however, Nestle acknowledged, as "events in the Middle East were disruptive," with the destruction of a plant in Syria that had served several markets in the region.

"There was some softening in certain markets, especially in comparison to the first quarter of 2012," it added.

The group's head of investor relations, Roddy Child-Villiers,  said that sales of Nespresso were no longer growing as quickly owing to stiffer competition in the coffee capsule market, especially in Switzerland.

But Nestle was also able to highlight good performances in China, as well as in Turkey, parts of Africa and Indonesia.

In the United States, the group's main market, sales grew by 5.3% to 6.6 billion Swiss francs, while in Europe they were just 1.5% stronger at 3.7 billion francs, owing in part to a slow-down in France at the beginning of the year.

Copyright Agence France-Presse, 2013

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