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Nestle confirms outlook as Q1 sales growth slows

Food group Nestle confirmed it aims to grow underlying sales by 2-4 percent this year after growth slowed in the first quarter, hit by weak consumer demand for packaged foods in North America and a deflationary environment in western Europe.

Underlying “organic” sales growth at the maker of Buitoni pasta and Maggi soups slowed to 2.3 percent in the first quarter, from 3.9 percent in the year-ago period that included one more trading day and an earlier Easter, the group based in Vevey on Lake Geneva said in a statement on Thursday.

This was in line with forecasts in a Reuters poll.

Consumer goods groups face challenges as increasingly health-conscious consumers often prefer fresh produce to packaged foods, pushing the world’s biggest food group to make its products healthier by cutting back on sugar, salt and fat and build up the business of foods with health benefits.

Volume growth slowed to 1.3 percent, from 3.0 percent a year ago, hit by soft demand in North America and China, while pricing inched higher to 1.0 percent, from 0.9 percent.

Nestle said pricing was still negative in western Europe, but the trend was improving, notably thanks to price increases at the group’s flagship Nescafe brand.

Overall sales grew to 21.0 billion Swiss francs ($21.06 billion), from 20.9 billion, short of a 21.2 billion franc estimate in the poll.

Nestle confirmed the 2017 guidance new Chief Executive Mark Schneider gave in February of 2-4 percent organic growth, a stable trading operating profit margin and an increase in underlying earnings per share in constant currencies. (Reuters)

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