Nestle profits buoyed up by price rises

Price increases in the UK and continental Europe helped to keep foods group Nestle on track for its full-year targets in the first quarter, it said today.

The group said a 1.6% rise in pricing offset a 0.9% fall in real internal sales in its European zone in the period from January to March, resulting in organic growth in Europe of 0.7%.

Organic growth in the UK and Germany was positive, but France stayed negative, it said.

Overall, Nestle said it grew sales organically by 4.6% in the quarter, with price rises offsetting higher raw material costs.

It described the start to the year as “solid”, helping it to maintain a full year organic growth target of 5%-6%.

Chairman and chief executive Peter Brabeck-Letmathe said: “Our satisfactory first quarter growth is in line with our expectations.”

Nestle makes products ranging from instant coffee, evaporated milk and Ski yoghurt to Rolos, KitKats, Vittel mineral water, Buitoni pasta and Polo mints.

The group is based in Vevey in western Switzerland and has a UK head office in Croydon, south London, and factories across the country.

It said in October last year that poor weather and rising prices in Europe had contributed to flat profits in the first nine months against a year earlier. Consumer product rivals such as Unilever have experienced similar conditions.

Nestle said its consolidated sales in the first quarter were up 0.3% at 20.5bn Swiss francs (€13.3bn), with reported sales once again affected by a foreign exchange impact of minus 3.3%.

It said its drinks business had a good start to the year, with 4.7% organic growth helped by strong performances in instant coffee and ready-to-drink beverages.

Sales of milk, nutritional and ice cream products lifted by 4.1% while chocolate and confectionery had organic growth of 1.9%, held back by a weak performance in sugar confectionery and distribution issues in Russia. The group’s petcare division saw organic growth of 6.4%, mainly driven by US sales.