Swiss food giant Nestle reported an overall growth of 4.7%, in the first three months of 2020, marking the fastest quarterly growth in nearly five years.
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Mark Schneider, Nestlé CEO, commented: “Our company remained resilient in the first quarter, reflecting our diversified product portfolio and our strong local presence in 187 countries. However, this crisis is far from over and we will face many uncertainties in the coming quarters. We will continue to adapt quickly to changing consumer needs and to challenges in our global supply chains.”
Organic growth reached 4.3%, with growth of 4.7%. Pricing temporarily decreased by 0.4%, mainly reflecting timing of promotions in North America.
Organic growth was supported by strong momentum in the Americas and Europe. Asia posted negative growth, mainly due to a double-digit sales decline in China. South-East Asia posted solid growth, supported by strong momentum in Indonesia and improved growth in the Philippines and Thailand. Organic growth was 7.4% in developed markets and the growth in emerging markets was 0.5%.
By product category, the largest growth contributor was Purina PetCare and its premium brands Purina Pro Plan and Purina ONE. Prepared dishes and cooking aids grew at a high single-digit rate, with improved growth across all brands. Coffee saw good momentum, fueled by the demand for Starbucks products, Nespresso and Nescafé. Nestlé Health Science posted double-digit growth, reflecting elevated demand for consumer and medical nutrition products.
Acquisitions net of divestitures decreased sales by 4.7%, largely related to the divestment of Nestlé Skin Health and the U.S. ice cream business. Foreign exchange reduced sales by 5.8%, reflecting appreciation of the Swiss franc versus most currencies. Total reported sales decreased by 6.2% to 20.8 billion Swiss franc (US$21.4 million).
In April 2020, Nestlé also announced and completed the acquisition of Lily’s Kitchen, a premium natural pet food business.
The Board of Directors has decided to explore strategic options, including a potential sale, for its Yinlu peanut milk and canned rice porridge businesses in China. The intention is to ensure the long-term growth and success of these Yinlu businesses, which had sales of 700 million Swiss franc (US$718 million) in 2019. Nestlé will retain its ready-to-drink Nescafé coffee business, currently filled and distributed by Yinlu. Nescafé is a strategic growth driver, and Nestlé will continue to invest heavily in the brand in China.
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The Board of Directors has also reaffirmed and emphasized the strategic importance of the Chinese market for the group. Nestlé currently operates 31 factories, three R&D centers and four product innovation centers in the Greater China Region. The group has made significant capital expenditure investments in the region and continues to see significant opportunities for further investments and sustainable growth.