Nestlé – 1st Quarter 2004 : Sales in Swiss Francs Up 3.5 percent, Organic Growth 5.1 percent

   
Back to News archiveVevey,Apr 21, 2004

  • Organic growth within target range, at 5.1 percent
  • Real internal growth of 3.4 percent reflects strong volume growth in the Americas, as well as Zone Asia, Oceania and Africa
  • Good start underlines confidence in achieving 2004 objectives

Peter Brabeck, CEO of Nestlé, said: "The Group has, as forecast, accelerated real internal growth to 3.4 percent, while pricing contributed at a more normal level of 1.7 percent. Growth was particularly strong in Zone Americas and in Zone Asia, Oceania and Africa. Nestlé Waters was off to a challenging first quarter, but we are confident that it will see an acceleration in the months to come. Product-wise, the best performances were achieved by PetCare, Coffee, Milk products, Nutrition and Ice Cream, as well as by Alcon. The good start into 2004 should allow us to attain our objectives for the year, both in terms of growth as well as profitability."

The Nestlé Group's consolidated Swiss franc sales for the first quarter of 2004 amounted to CHF 20.4 billion, an increase of 3.5 percent over the comparable period of the preceding year. Organic growth improved to 5.1 percent, with real internal growth of 3.4 percent and a more normal pricing level of 1.7 percent. Divestments, net of acquisitions, reduced reported sales by 1.3 percent, reflecting mainly the sale of the low-margin beverage distribution business Trinks in Germany. The negative foreign exchange impact was only 0.3 percent.

Sales by Management Responsibilities and Geographic Area
  Jan.-March Jan.-March Organic Growth Real Internal Growth
2004 2003 Jan.-March 2004 Jan.-March 2004
in CHF million % %
Zone Europe*  6 886  6 606  +0.4  -0.7
Zone Americas  6 302  6 978  +8.0  +4.7
Zone Asia, Oceania and Africa  3 472  3 291  +7.1  +5.5
Nestlé Waters  1 810  1 719  +2.4  +3.4
Other Activities **  1 939  1 119 +11.1 +10.2
Total 20 409 19 713  +5.1  +3.4
* 2003 sales re-stated because of Eismann.
** Mainly pharmaceutical products and joint ventures; Eismann, a frozen food distributor, has been moved from Zone Europe to Other Activities, because it is under a new management due to its planned divestiture.

Zone Europe was off to a slow start, reflecting primarily a difficult retail environment in Nestlé's three most important markets. Zone Americas developed well, pushed by double-digit increases in Mexico, the Bolivarian region and in PetCare. Asia took off strongly, with significant growth recorded in Indochina, China and the Middle East, as well as in most of the smaller markets. The water business had a slow start, mainly because of the comparison effect resulting from an exceptionally strong first quarter in 2003 in the US, due to pre-war stockpiling. Planned product launches in Europe and normal growth in the US will improve the performance of the water business in the coming months. The breakfast cereal joint venture and Alcon delivered a very strong first quarter with double-digit organic growth.

Sales by Product Group
  Jan.-March Jan.-March Organic Growth Real Internal Growth
2004 2003 Jan.-March 2004 Jan.-March 2004
in CHF million % %
Beverages  5 019  5 162  +3.1  +3.3
Milk/Nutrition/Ice Cream  5 338  4 865  +7.6  +4.1
Culinary  3 938  3 856  +2.0  +0.7
Chocolate/Confectionery  2 428  2 365  +1.9  -0.1
PetCare  2 385  2 257  +9.1  +6.8
Pharma  2 301  2 208 +10.9 +10.2
Total 20 409 19 713  +5.1  +3.4

Among the product groups, PetCare did particularly well, as Nestlé Purina's management shifted from successful integration to renewed innovation. Chilled Culinary products advanced strongly, as did Milk products, Nutrition and Ice Cream. In the Beverage business, Soluble Coffee performed well and Nespresso recorded a significant advance. In Chocolate and Confectionery, growth improved from Q1 2003, and management measures for further improvement are being implemented and should yield results in the second half of this year.

Nestlé continues to look forward to the coming months with cautious optimism. It expects the improving economic climate in several regions to benefit consumer confidence. Real internal growth, bolstered by innovation and Nestlé's strong brands, will be the driving force behind organic sales growth. The Group in 2004 is again focused on further margin and cash flow improvement and, barring major unforeseen events, Nestlé expects to be able to report positively as the year progresses.

Contacts:
Media: François-Xavier Perroud Tel.: +41-21-924 2596
Investors: Roddy Child-Villiers Tel.: +41-21-924 3622