Nestlé 'cautiously optimistic' for 2004

Related tags Cent United states dollar Milk Us

Nestlé, the world's largest food group, has reported underlying
growth of 5.1 per cent for the first quarter of 2004, helped by a
strong performance from its added value dairy business, where sales
were some 7.6 per cent ahead. The results are yet another
indication of the value of innovation in the dairy industry, but
the company said that it would remain cautious given the uncertain
economic conditions, writes Danny Vincent.

Total group sales were SF20.4 billion, up 5.1 per cent on a like-for-like basis but cut to 3.4 per cent as a result of divestments and a negative currency effect.

The group said its dairy business witnessed good growth in the first quarter - driven by the sales of its added value products. Its milk, nutrition and ice cream business witnessed 7.6 organic growth to SF5.3 billion, making it the largest single business unit within the Nestlé group. Actual growth was 4.1 per cent.

"This sector witnessed good growth due to two factors: the company's policy in innovation and the changing economical environment,"​ explained the company's spokesman François-Xavier Perroud.

Products such as milk powder with added omega three and calcium performed well across core markets, he said.

Unlike many in the industry, Nestlé said it was relatively unaffected by currency movements in the first quarter. The weakened US dollar had a negative effect of just 0.3 per cent.

"Currency effect was relatively low because the US dollar is not strong against the Swiss Franc and at the same time there is a strong euro,"​ Perroud explained.

Commitment to added value products in the first quarter appears to have paid off for major dairy companies. For example, Danone, the world's largest yoghurt producer, reported last week that the sales of its functional yoghurt Actimel had increased 40 per cent in the first quarter of the year.

But despite its strong first quarter performance, Nestlé said it was looking forward to the coming months with only "cautious optimism"​, aware that there are a number of factors which could still impact growth in the rest of the year. The rest of the year would see a particular on innovation brands, the company added.

" Our health care and nutritional divisions witnessed significant growth rates, above those of our other businesses. We believe that it is evident that more regions are looking forward to economic growth than the year before. Overall we think that the economic climate is better than this time last year,"​ Perroud said. Europe remains the weakest market for the company, with total sales growth there of just 0.4 per cent in the first quarter, compared to 7.1 per cent in Asia and 8 per cent in the US.

Related topics Manufacturers

Related news