April 20, 2012 - 15:49 AMT
PanARMENIAN.Net - Swiss food and drinks giant Nestle SA forecast Friday, April 20 that 2012 will be a challenging year but reported that first-quarter sales rose a healthy 5.6 percent from a year earlier, fueled by strong growth in emerging markets and higher retail prices, AP reported.
The maker of Nescafe, Haagen Dazs and Jenny Craig said sales amounted to 21.39 billion Swiss francs ($23.34 billion), though demand in developed markets was subdued amid global financial uncertainty in the United States - its biggest market - and Europe.
Sales in developed countries grew 3.1 percent, compared with a 13 percent rise in emerging markets.
Europe's food makers have been hurt by the continent's sovereign debt crisis, which has forced governments to cut spending, seen a spike in unemployment and made consumers wary of spending. Meanwhile, higher commodity prices have made retail food prices more expensive. Nestle results showed it managed the tricky market situation relatively well.
Andrew Wood of the Sanford C. Bernstein research firm said he had anticipated that Nestle would have a "fairly strong top-line start to the year." However, he does not believe it would be enough to get its stock "moving again, particularly given current lofty valuations."
Bulcke said a combination of retail price hikes and a predicted drop in the cost of raw materials in the second half of the year has enabled the company to confirm the full-year outlook "of delivering 5 to 6 percent organic growth" and higher earnings for shareholders.
Like many Swiss companies, Nestle has had to cope with the strength of the Swiss franc against other currencies, but since last summer Switzerland's central bank has moved aggressively to weaken the franc and improve the outlook for Swiss exports.
The world's biggest food and beverage maker said its organic sales growth was a robust 7.2 percent, while real internal growth was 2.8 percent. Nestle said organic growth was 6.2 percent in the Americas, 2.3 percent in Europe and 11.4 percent in Asia, Oceania and Africa.