London - Nestlé expected to achieve its targeted long-term sales growth rate next year after an acceleration in revenue from Asia and Africa in the third quarter, the biggest food company said yesterday.
Nestlé’s sales growth excluding acquisitions, divestments and currency swings might reach its goal of 5 percent to 6 percent in 2014, chief executive Paul Bulcke said. The company also reiterated that it expected full-year growth of “around” 5 percent this year.
“If this is the line we walk, that is the intention we have,” Bulcke said, adding that the goal was “doable” for 2014. “We see some colours coming back in many areas of the world, in spite of some slowing down.”
Nestlé’s acceleration in emerging markets over the past three months contrasts with the slowdown seen by rivals such as Unilever and PepsiCo.
Still, the Swiss firm faces headwinds as European consumers cut spending, which led to Nestlé’s lowest pricing growth for the first nine months of any year since 2003.
The stock rose as much as 3.2 percent, the biggest intraday gain in four months, and traded 3.1 percent higher at Sf63.90 (R696) at 1.33pm in Zurich yesterday. The shares have gained 7.2 percent this year, compared with a 1.3 percent drop in the Amsterdam-traded shares of Unilever.
Total nine-month revenue rose 4 percent to Sf68.35 billion, the maker of Nespresso coffee capsules said. That compares with a median analyst estimate of Sf69bn. Nestlé’s emerging market revenue rose 8.8 percent in the first nine months of the year, excluding acquisitions, divestments and currency swings, speeding up from the first half’s 8.2 percent pace.
The weakness of emerging market currencies against the franc reduced nine-month sales by 2.5 percent, more than the 0.9 percent reduction in the first half. Chief financial officer Wan Ling Martello said the weakness of the Brazilian real and Indian rupee weighed on sales growth.
Revenue gained 4.4 percent excluding acquisitions, divestments and currency swings.
Unilever said last month that third-quarter revenue growth had slowed due to a deterioration in emerging markets across Asia.
PepsiCo said on Wednesday that sales growth in Asia, the Middle East and Africa decelerated to 6 percent in the period, down from 14 percent in the previous three months.
Nestlé’s performance in emerging markets was “the acceleration that the market was looking for”, said Warren Ackerman, an analyst at Société Générale.
Nestlé said the growth was helped by gains exceeding 10 percent in Africa and Indonesia in the first nine months, and single-digit gains in the Middle East and India. Growth in China slowed to high single-digits, Martello said. – Bloomberg