Nestlé posts 7.1% confectionery growth in Q1

By Oliver Nieburg

- Last updated on GMT

Related tags Chocolate Americas Developed country

Nestlé posts 7.1% confectionery growth in Q1
Nestlé has recorded 7.1% growth for its confectionery business in its first quarter (Q1) results released today driven by emerging chocolate markets such as Latin America and Asia.

Overall performance

Nestlé’s Q1 sales were up 7.2% to €17.8bn (CHF 21.4bn) compared to the same quarter last year.

Nestle CEO Paul Bulcke said consumer confidence was low in developed markets as sales growth in emerging markets outpaced developed markets by around four times.

The company grew in the Americas by 6.8% and 3.4% in Europe compared to 12.2% in Asia, Oceania and Africa.

Recent acquisitions, such as the $1.7bn buy of Chinese confectionery firm Hsu Fu Chi, were said to have added 3% to sales.

Growth in confectionery

Nestlé’s confectionery category, which includes brands, such as KitKat, Smarties and Aero, achieved 7.1% growth during the quarter taking sales to €2.1bn (CHF 2.5bn).

Of Nestle’s seven product segments, confectionery is the sixth largest in terms of sales, behind beverages, dairy, prepared dishes, pet care, and nutrition.

All these categories also outpace confectionery in terms of sales growth.

The company said that chocolate growth was strong in Latin America helping the region achieve double digit growth overall, with Brazil and Mexico the highlights.

Asia, Oceania and Africa also saw double digit growth in chocolate, with KitKat performing strongly in Japan.

Nestle head of investor relations Roddy Child-Villiers said that Q1 confectionery performance benefited from Easter falling earlier than in 2011, but there was also strong growth in Asia where Easter is not a material factor, with highlights including China and the Middle East.

Raw materials: pressures easing

Nestle said the trading environment in 2012 had been challenging as expected.

It anticipates that raw material costs will improve in Q2 and has therefore reiterated its full year outlook of delivering 5-6% organic growth.

The International Cocoa Organization (ICCO) recently said that at the end of March, cocoa arrivals at ports in the Ivory Coast and Ghana were 3.5% higher compared with the same period for the previous season.

The price of cocoa was 30.5% lower in March this year compared to last year, according to ICCO figures.

The current price stands at 2318.45 US$ per tonne.

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