Nestle shrugs off COVID-19 impact thanks to pet food and health nutrition

By Silke Koltrowitz ZURICH (Reuters) - Nestle raised its guidance for 2020 organic sales growth to around 3% and reaffirmed its ambition to return to mid-single digit growth after strong demand for pet food, coffee and health products boosted quarterly growth. Chief Executive Mark Schneider told analysts on a call the new full-year guidance was 'cautious' after the world's biggest food group posted organic growth of 4.9% in the third quarter

Reuters October 22, 2020 00:07:03 IST
Nestle shrugs off COVID-19 impact thanks to pet food and health nutrition

COVID-19 impact thanks to pet food and health nutrition" src="https://images.firstpost.com/wp-content/uploads/reuters/10-2020/22/2020-10-21T054126Z_1_LYNXMPEG9K0CT_RTROPTP_2_NESTLE-RESULTS.jpg" alt="Nestle shrugs off COVID19 impact thanks to pet food and health nutrition" width="300" height="225" />

By Silke Koltrowitz

ZURICH (Reuters) - Nestle raised its guidance for 2020 organic sales growth to around 3% and reaffirmed its ambition to return to mid-single digit growth after strong demand for pet food, coffee and health products boosted quarterly growth.

Chief Executive Mark Schneider told analysts on a call the new full-year guidance was "cautious" after the world's biggest food group posted organic growth of 4.9% in the third quarter.

"It's very hard to predict where exactly COVID is going to turn next and what the measures are going to be in key markets for us," he said. "With COVID around us, you will see rollercoaster movements here in the numbers going forward."

Nestle had previously expected organic growth of 2-3% for this year.

Schneider said the company was working hard to reach its mid-term target of mid-single digit organic growth, initially set for this year. "I feel good about our ability to be there in a reasonable amount of time."

The maker of Nescafe coffee and Kitkat chocolate has weathered the pandemic better than some peers as its focus on high-growth categories helped offset a slump in food sales to restaurants and cafes.

In contrast, French peer Danone announced an extensive review this week that could lead to disposals after its like-for-like sales fell 2.5% in the third quarter.

Unilever is due to release a trading statement on Thursday.

LOCKDOWN BOOST

Shares in Nestle, up 2.5% so far this year, was down 0.2% at 1436 GMT, outperforming the food sector index which was 1.1% weaker.

Kepler Cheuvreux analyst Jon Cox said Nestle remained his preferred pick in food, while Vontobel's Jean-Philippe Bertschy called it a "must-have stock", set to emerge a winner from the pandemic.

Demand for food and drinks consumed at home remained strong during lockdowns, while sales of products consumed outside home and on the go - about 15% of Nestle's sales - fell 26.4% in the third quarter, Nestle said.

"The trend towards more in-home consumption, which favours us, I think, is here to stay, and that bodes well for next year," Schneider said.

To boost growth, Nestle wants to keep developing its portfolio, notably expanding its health science business recently bolstered by the $2 billion Aimmune Therapeutics acquisition. It intends to double the unit's sales to 4 billion Swiss francs ($4.42 billion) by 2021/2022 versus 2017 levels.

It has been ditching underperformers and put North American waters and its Chinese Yinlu peanut milk brand under strategic review.

While the Americas region posted the strongest growth rate, Asia was only slightly positive dragged down by China, where Nestle's out-of-home business, infant nutrition, Yinlu and its sweets brand Hsu Fu Chi are struggling.

($1 = 0.9044 Swiss francs)

(Reporting by Silke Koltrowitz, editing by John Revill and Emelia Sithole-Matarise)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

Find latest and upcoming tech gadgets online on Tech2 Gadgets. Get technology news, gadgets reviews & ratings. Popular gadgets including laptop, tablet and mobile specifications, features, prices, comparison.

also read

Global Markets: Stocks ascend to record on economic recovery, vaccine outlook
Business

Global Markets: Stocks ascend to record on economic recovery, vaccine outlook

By Chuck Mikolajczak NEW YORK (Reuters) - A gauge of global stocks hit a record and oil prices jumped on Monday as the newest positive data for a potential COVID-19 vaccine and signs of economic recovery in Asia boosted sentiment. U.S. stocks advanced, with the Dow Industrials setting a record as it neared the 30,000 mark for the first time, after pharma company Moderna said its prospective vaccine was 94.5% effective in preventing the illness, which has crushed economies across the globe

Airbnb IPO filing shows third-quarter earnings beating virus with cost cuts, new focus
Business

Airbnb IPO filing shows third-quarter earnings beating virus with cost cuts, new focus

By Anirban Sen and Joshua Franklin (Reuters) - Airbnb Inc's initial public offering (IPO) registration showed on Monday that the home rental startup turned a profit in the third quarter despite the COVID-19 pandemic, as it gears up for one of the most anticipated stock market debuts in recent years. The filing, published ahead of Airbnb's anticipated stock market debut in December, showed a dramatic recovery in its fortunes, after the coronavirus outbreak dragged down its core home rental business during the first half of the year. The slump forced it to lay off 25% of its workforce in May, suspend marketing activities for the year and seek $2 billion (£1.5 billion) emergency funding from investors, including Silver Lake and Sixth Street Partners, at a valuation of $18 billion

Biden says U.S., allies need to set global trade rules to counter China's influence
Business

Biden says U.S., allies need to set global trade rules to counter China's influence

By David Lawder WASHINGTON (Reuters) - U.S. President-elect Joe Biden said on Monday the United States needed to negotiate with allies to set global trading rules to counter China's growing influence but declined to say whether he would join a new China-backed Asian trade pact signed on Sunday.