Nestlé sees sales grow but warns future may not be so sweetNestlé, the world's biggest food group, today said it expected recent swingeing swinge
tr.v. swinged, swinge·ing also swing·ing, swing·es Archaic
To punish with blows; thrash; beat.
[Middle English swengen, to shake, dash increases in raw material costs to abate abate v. to do away with a problem, such as a public or private nuisance or some structure built contrary to public policy. This can include dikes which illegally direct water onto a neighbors property, high volume noise from a rock band or a factory, an improvement during this year as it reported strong sales growth boosted by substantially higher prices.
The Swiss company, owner of KitKat, Nespresso and Perrier, saw its shares dip more than 2% after admitting this trend would constrain its ability to pass on higher prices and could hit volumes.
In the first quarter, sales rose 6% to Sfr25.7bn (£12.6bn), with underlying or organic growth - which excludes currency effects and acquisitions - up 9.8%. The strength of the Swiss franc Noun 1. Swiss franc - the basic unit of money in Switzerland
franc - the basic monetary unit in many countries; equal to 100 centimes
centime - a fractional monetary unit of several countries: France and Algeria and Belgium and Burkina Faso and Burundi and against the dollar reduced revenues by 7% but Nestlé raised its prices 5.3% in the quarter - the highest jump for more than a decade and evidence of the power of its brands, enabling it to pass on increased costs despite declining consumer spending Consumer demand or consumption is also known as personal consumption expenditure. It is the largest part of aggregate demand or effective demand at the macroeconomic level. .
The group, which is switching its focus to healthy, nutritional foods, said it expected full-year earnings to beat 2007's levels on the back of organic sales growth "approaching" last year's 7.4%. Sales in its nutrition division grew by an underlying 14.4% in the quarter.
Paul Bulcke Paul Bulcke was appointed the new CEO of Nestlé on 20 September 2007 and will officially start in his new role in April 2008.
Paul Bulcke was born in 1954 in Roeselare, Belgium. , the new chief executive, said: "On the basis of this high-quality growth, with a good balance between real internal growth and pricing, I am confident that we will achieve our 2008 targets: organic growth approaching the 2007 level together with improved EBIT EBIT
See: Earnings Before Interest and Taxes
See earnings before interest and taxes (EBIT). [earnings before interest and taxes In financial and business accounting, earnings before interest and taxes (EBIT) is a measure of a firm's profitability that excludes interest and income tax expenses.
EBIT = Operating Revenue – Operating Expenses + Non-operating Income ] margins in constant currencies."
Chevreux analyst Mario Montagnani in Zurich said: "These are good quality results. It was pretty much at the high end of expectations. There was a strong contribution from volume increases - it wasn't just pricing coming through. So there is no evidence of a slowdown or of people trading down (to cheaper products)."
Nestlé, which saw acquisitions boost sales by 3.2% in the quarter, is set to boost its war-chest by $39bn through the two-stage sell-off of its majority stake in optical company Alcon to Swiss pharma group Novartis.