Nestle raises guidance after third-quarter sales beat expectations

Nestle raises guidance after third-quarter sales beat expectations

Reuters  | Oct 21, 2020 07:30

Nestle raises guidance after third-quarter sales beat expectations

By Silke Koltrowitz

ZURICH (Reuters) - Nestle (S:NESN) raised its guidance for 2020 organic sales growth to around 3% after beating third-quarter expectations on Wednesday with 4.9% growth driven by strong demand for pet food and health products.

The world's biggest food group has weathered the COVID-19 pandemic better than some peers thanks to its broad portfolio helping offset a slump in food sales to restaurants and cafes.

Shares in Nestle, up 2.5% so far this year, were indicated to open 2.7% higher in pre-market trading .

Demand for food and drinks consumed at home remained strong during the pandemic, while sales of products destined to out-of-home venues struggled, the maker of Nescafe coffee and KitKat chocolate said in a statement.

Nestle said it wanted it keep developing its portfolio, notably expanding its health science business recently bolstered by the $2 billion Aimmune Therapeutics acquisition.

For the first nine months of the year, Nestle's organic sales grew by 3.5%, beating the 2.8% in a company-supplied consensus analysts' estimates.

Nestle had previously expected organic growth of 2-3% for this year. It confirmed it wanted to improve its margin.

Sales in the Americas posted the strongest growth rate in the nine-month period, while Asia was only slightly positive.

Sales in Swiss francs fell 9.4% to 61.9 billion Swiss francs (52.7 billion pounds) hit by divestitures.

Under Chief Executive Mark Schneider, Nestle divested its skin health unit, Herta meat and U.S. ice cream brands and has put North American waters and peanut milk label Yinlu under strategic review.

Nestle said both reviews were on track and were expected to be completed in early 2021.

French peer Danone (PA:DANO) announced an extensive review this week that could lead to disposals after its like-for-like sales fell 2.5% in the third quarter.

© Reuters. FILE PHOTO: Logo of Nestle is seen in Konolfingen

Unilever (L:ULVR) is due to release a trading statement on Thursday.

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