Coffee lovers and home bakers drive strongest Nestle quarter in a decade

“Our confidence level to get to an organic growth rate of more than 4% (this year) has certainly increased on the back of our first-quarter performance,” Chief Executive Mark Schneider told investors on a call on Thursday.

Nestle’s ecommerce business also fared well in the first quarter, with sales up 40%, and its health science business benefitted as people bought more vitamins and supplements. Demand for fortified milks boosted dairy too.

“What a blow out – the strongest quarterly number since 2011,” Kepler Cheuvreux analyst Jon Cox said, pointing to a recovery in emerging markets, while Bernstein analyst Bruno Monteyne described the figures as an “amazing beat”.

Shares in Nestle, up just over 2% so far this year, were 2.9% higher at 1321 GMT, outperforming the European food sector.

The maker of KitKat chocolate bars and Maggi soups confirmed its full-year guidance for higher organic sales growth, which strips out currency swings and acquisitions/divestments, than the 3.6% achieved last year.

Organic sales leapt 7.7% in the first quarter versus 4.3% in the same period last year, easily beating a forecast for 3.3% growth in a company-compiled consensus and a 3.3% drop in sales posted by peer Danone (DANO.PA) this week. read more

Unilever (ULVR.L), (UNc.S) is due to post its first-quarter update on April 29.

The Americas, and also Asia where the pandemic struck first last year, showed strong growth, while Europe saw a 4.4% rise.

Coffee was the largest growth driver, with Nespresso portioned coffee up more than 17%, dairy almost 16% and petcare around 9%.

The group’s out-of-home business, which sells food and drinks to restaurants and hotels, struggled, although not as badly as earlier in the pandemic.

The infant nutrition business returned to growth in China, but was under pressure elsewhere as birth rates fell.

Nestle said it had made further progress in reshaping its portfolio, as it expands in health and wellness foods and pulls out of underperforming businesses.

Schneider said the company’s focus for acquisitions was on high-growth categories like coffee or petcare, but “across the full spectrum, if something is a good fit and strengthens us, we’re open”.

Nestle recently sold its North American water brands to One Rock Capital Partners for $4.3 billion, but bought U.S. premium water brand Essentia. It also offloaded its Yinlu peanut milk business in China.