Nestlé: 4.6% Organic Growth In First Quarter

        Group-wide organic growth of 4.6%

        6.3% sales increase at constant exchange rates

        Swiss franc sales down 7.5% as a result of a 13.8% negative foreign exchange impact

 

 

 

Vevey, April 23, 2003  -  The Nestlé Group's consolidated sales for the first three months of 2003 amounted to CHF 19.7 billion. In constant currencies, sales increased by 6.3%, reflecting organic growth of 4.6% (real internal growth 2.5%, pricing and others 2.1%), as well as a small contribution from acquisitions, net of divestitures. As a result of the strong Swiss franc, the adverse foreign exchange effect was 13.8%.

 

Foreign exchange factor held back consolidated sales, and real internal growth was impacted by the late Easter date and the competitive situation in Japan. Additionally, in keeping with the Group's policy of ensuring margin improvements, Nestlé raised prices in several product categories to reflect cost increases. Nevertheless, the Group expects its strong brands, its broad distribution network and its capacity for innovation to lead to an improvement in sales growth as the year goes on.

 

 

 

 

The growth rate in Western Europe reflects the importance of chocolate and ice cream to that Zone, both of which were impacted by the late Easter date. There should be some improvement, therefore, in the first half. Canada and the US performed well, but there was some slowness in Latin America. Importantly, however, the key markets of Brazil and Mexico both achieved positive RIG and organic growth. Most Asian markets are growing at a good rate, with Greater China outperforming its ambitious target of double-digit RIG. In Japan measures were taken to improve the quality of sales in the ready-to-drink business. The water business and Alcon again delivered good growth, capitalizing on their leadership positions in their respective markets.

 

 

Among the product groups, beverages, especially soluble coffee and coffee mixes under the Nescafé brand, and powdered beverages, under brands such as Milo and Nesquik, did well, as did the specialty roast & ground coffees. There was good progress also in the chilled and the frozen culinary sector; the recently acquired Chef America achieved double-digit growth. The performance of chocolate and confectionery was impacted by the late Easter, as well as by price increases.

 

Nestlé also expects the foreign exchange situation to improve in the coming months, especially as the weakening of the major currencies vis-à-vis the Swiss franc started in the second half of 2002. This means that even if the US dollar were to remain unchanged through the rest of 2003, the negative impact of foreign exchange on Nestlé's reported results would be significantly reduced from the current level of 13.8%.

 

While 2003 will clearly be a challenging year, the Group is well placed to further improve its organic growth rate. Nestlé will continue to focus on margin and further cash flow improvements, pursuing its policy of long-term profitable growth. Barring major unforeseen events, the Nestlé Group expects to continue to improve its performance in constant currencies in 2003.