BCN-11 Virus stockpiling, divestment boosts Nestle results

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ZCZC

BCN-11

HEALTH-VIRUS-SWITZERLAND

Virus stockpiling, divestment boosts Nestle results

ZURICH, April 24, 2020 (BSS/AFP) – Swiss food giant Nestle said Friday
that its core sales surged in the first three months of 2020 as people
stocked up on pet food and coffee amid the coronavirus crisis.

The sale of its US ice cream business in January also boosted its bottom
line, offsetting a sharp drop in demand from China, a statement said.

Nestle said overall organic sales grew by 4.3 percent from the same period
a year earlier, driven by strong sales in North America and Europe, with
Purina PetCare products seeing the most growth, and sales of prepared dishes
and coffee products also surging.

Organic growth excludes the impact of recent acquisitions or divestments
to focus on a company’s core operations.

With the pandemic raging, Nestle’s Health Science division posted double-
digit growth, which the company said reflected “elevated demand for consumer
and medical nutrition products”.

Meanwhile, online sales surged by 29.4 percent and exceeded 10 percent of
Nestle’s total sales for the first time.

At the same time however, the company said the value of its sales declined
by 6.2 percent to 20.8 billion Swiss francs ($21.3 billion, 19.7 billion
euros), mainly due to the strength of the Swiss franc — seen as a safe haven
for investors during the crisis — against other currencies.

Nestle highlighted the impact of divestitures, including the shedding of
its US ice cream business to Froneri, which was completed on January 31 for
$4.0 billion.

The sales increase in North America and Europe in March, Nestle said, was
“partially supported by consumer stockpiling” linked to the novel coronavirus
pandemic, which has claimed more than 190,000 lives worldwide.

At the same time, China, where the virus first began spreading late last
year, posted a double-digit decline in organic growth, mainly “due to
movement restrictions in place for almost the full quarter, limited consumer
stockpiling and relatively higher exposure to out-of-home channels,” Nestle
said.

That was a reference to sales to various outlets such as restaurants.

Nestle, which owns KitKat, Nespresso, and Maggi among other brands, said
it had been able to minimise the impact of the global crisis, and continue
serving retail partners and consumers, despite some local supply chain
disruptions and temporary staffing shortages.

The company acknowledged that its “out-of-home and food service customers”
had been severely affected by the crisis, and said it had set up a system to
help them extend payment terms, suspend rental fees for coffee machines and
offer free products.

Following the news, the company saw its share price rise nearly three
percent in mid-afternoon trading, as the Swiss stock exchange’s main SMI
index inched up 0.2 percent.

BSS/AFP/MRU/2010hrs