In this news, we discuss the Nestle shrugs off COVID-19 impact thanks to pet food and health nutrition.
ZURICH (Reuters) – Nestlé NESN.S raised its forecast for organic sales growth for 2020 to around 3% after exceeding third-quarter expectations on Wednesday with 4.9% growth driven by strong demand for baby food. pets, coffee and health products.
The world’s largest food group has weathered the COVID-19 pandemic better than some of its peers, as its focus on high-growth categories helped offset the decline in food sales to restaurants and cafes.
In contrast, its French counterpart Danone DANO.PA announced this week an in-depth review that could lead to divestments after its sales at constant scope fell 2.5% in the third quarter.
Unilever ULVR.L is due to issue a trade statement on Thursday.
Shares of Nestlé, up 2.5% so far this year, rose 1.6% to 0706 GMT.
Kepler Cheuvreux analyst Jon Cox said Nestlé remained his preferred choice in food, while Jean-Philippe Bertschy of Vontobel called it an “indispensable stock” ready to emerge as a winner from the pandemic.
Demand for food and beverages consumed at home remained strong during the lockdowns, while sales of products consumed away and on the go – around 15% of Nestlé’s sales – fell 26.4% in the third quarter, said coffee maker Nescafe and KitKat chocolate. in a report.
Nestlé has said it is keen to continue growing its portfolio, including expanding its health sciences business recently bolstered by the $ 2 billion acquisition of Aimmune Therapeutics.
For the first nine months of the year, Nestlé’s organic sales rose 3.5%, exceeding the 2.8% of a consensus provided by the company on analyst estimates.
Nestlé had previously forecast 2-3% organic growth for this year and some analysts said the increase in guidance was cautious as 2% growth in the last quarter would be enough to achieve it. Nestlé has confirmed that it wants to improve its margin.
Sales in the Americas recorded the highest growth rate in the nine-month period, while Asia was only slightly positive.
The large Chinese market, where Nestlé’s out-of-home business, its Yinlu peanut milk brand and infant nutrition division struggled, returned to positive growth in the third quarter, the company said.
The group’s sales in Swiss francs fell 9.4% to 61.9 billion Swiss francs (68.33 billion dollars), affected by the strength of the Swiss franc and divestments.
Under the leadership of CEO Mark Schneider, Nestlé divested its skin health unit, the Herta meat and ice cream brands in the United States and subjected North American and Yinlu waters to strategic review.
Reporting by Silke Koltrowitz, editing by John Revill
Original © Thomson Reuters