* First-quarter sales 20.8 bln Sfr vs 21.5 bln in poll
* Organic sales growth 4.2 pct vs 4.1 pct in poll
* Reported sales fall 5.1 pct hit by strong franc
* Aims for around 5 pct sales growth in 2014
(Adds analyst comment, detail)
By Silke Koltrowitz
ZURICH, April 15 Nestle expects sales
growth to pick up in the next few quarters after slowing to 4.2
percent in local currencies in the first, when unusually cold
weather hit sales in North America and cost-conscious Europeans
continued to opt for cheaper brands.
The maker of Maggi soups and Nescafe instant coffee is
facing hard times, with sluggish growth in emerging markets no
longer making up for weak sales in the developed economies that
account for most of its business.
The world's biggest food company said it expected a
continued strengthening of the Swiss franc to drag on its
reported sales this year.
But it said a roll-out of new products was helping to
sustain growth in difficult market conditions and it would keep
innovating and supporting its brands.
Sales in local currency terms in the first quarter rose to
20.8 billion Swiss francs ($23.66 billion), short of the 21.46
billion consensus analyst forecast in a Reuters poll. Sales fell
5.1 percent in Swiss franc terms, hit by the relative strength
of the Swiss currency.
Vontobel analyst Jean-Philippe Bertschy said a greater than
expected currency effect was the main reason that sales in Swiss
francs missed forecasts, but volume growth of 2.6 percent and
price increases of 1.6 percent were above expectations.
"We continue to expect a gradual improvement of the
underlying performance in the coming months," he said,
confirming his "buy" rating on the stock.
The first quarter's organic growth of 4.2 percent, which
strips out currency moves and acquisitions, was just ahead of
the 4.1 percent forecast in the poll, but below 4.3 percent in
the same year-ago period and 4.6 percent for the whole of 2013.
"We confirm our full-year outlook: performance will be
weighted to the second half, outperforming the market, with
organic growth around 5 percent," Nestle said in a statement.
Sales were hit by several one-off events, including the
extreme cold in the United States which made people shop less.
Chocolate sales were also weaker in the first quarter because
Easter holidays this year fall in April instead of March, which
drove consumers to postpone purchases.
Bernstein analyst Andrew Wood said accelerating pricing and
the Easter impact in the second quarter should help top-line
momentum throughout the rest of the year.
Nestle generates a quarter of its sales in the United
States. In the Americas, sales were up 4.6 percent, helped by
strong demand for soluble coffee and pet food in Latin America.
Sales in Europe rose only 0.3 percent, as prices continued to
fall, while Asia, Oceania and Africa (AOA) grew 7.3 percent.
Exane BNP Paribas analyst Jeff Stent said that, while AOA
remained sluggish, an acceleration in the water business with
like-for-like growth of 6.2 percent was "the main surprise".
Nestle said its Nespresso portioned coffee business
continued to see strong growth momentum in all markets. It is
facing increased competition from rival systems and copycat
capsules made by peer Mondelez and others. To fuel growth, it
recently launched a large-cup coffee maker for North America.
Like some of its peers, Nestle is reviewing its portfolio to
get rid of underperforming brands that has already led to the
divestiture of the bulk of its Jenny Craig weight management
business and its PowerBar energy bars.
Nestle shares, which have gained 2.5 percent so far this
year, are trading at around 19 times forward earnings, in line
with rivals Danone and Unilever .
Unilever, which also sells soap and washing powder, will
post first-quarter sales on April 24, while dairy group Danone's
trading update is due on Wednesday. U.S.-based Kraft Foods
reports first-quarter results on May 1 and snack maker
Mondelez on May 7.
($1 = 0.8791 Swiss Francs)
(Reporting by Silke Koltrowitz; editing by Tom Pfeiffer)