Zurich - Nestle SA’s first-half sales growth exceeded analysts’ estimates, enabling the world’s largest foodmaker to maintain a forecast that will require even stronger growth in the second half.
Sales increased 4.5 percent on an organic basis, the Vevey, Switzerland-based company said in a statement on Thursday. Analysts expected 4.2 percent, according to the median estimate of 14 analysts in a Bloomberg News survey. Nestle reiterated that it expects organic sales will increase about 5 percent in 2015.
A revamp of ailing frozen-food brands Lean Cuisine and Stouffer’s has shown “promising” initial signs in the US, the company said. Still, the maker of Maggi noodles is struggling with the strong franc and has been wrestling with a product recall in India that caused that market’s first quarterly loss in at least 15 years.
“Overall, positives outweigh negatives and this will give added confidence that Nestle can get closer to 5 percent organic growth for the year,” Warren Ackerman, an analyst at Societe Generale, wrote in a note. Still, most analysts are expecting 2015 growth of about 4.5 percent, he said.
The stock rose 2.4 percent to 73.90 francs as of 9.03am in Zurich, giving the company a market value of 235 billion francs ($240 billion).
American acceleration
Revenue growth in the Americas accelerated to 5.2 percent in the first half from 3.7 percent in the first quarter, driven by pricing. Nestle’s definition of organic excludes acquisitions, divestments and currency shifts.
“The main surprises relative to our expectations is in Zone Americas,” wrote Jeff Stent, an analyst at Exane BNP Paribas. “From a bottom-line perspective, results are basically in-line.”
Chief Executive Officer Paul Bulcke has bolstered the food company by expanding into skin health, having spent $5 billion on acquisitions last year to acquire L’Oreal SA’s stake in a joint venture plus rights to drugs from Valeant Pharmaceuticals International.
“Lower commodity costs surely provided some relief,” said Patrik Schwendimann, an analyst at Zuercher Kantonalbank in Zurich.
BLOOMBERG