Nestle pricing strategy helps lift sales in tough markets

Thu Oct 17, 2013 10:21am EDT
 
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By Silke Koltrowitz

VEVEY, Switzerland (Reuters) - Nestle NESN.VX said competitive pricing helped to lift sales growth in spite of tough conditions in emerging markets and Europe, reassuring investors worried by recent negative news from its peers.

The world's biggest food group and rivals such as Danone (DANO.PA: Quote) and Unilever (ULVR.L: Quote) have been grappling with sluggish consumer demand in austerity-hit Europe and a slowdown in many emerging markets, hit by inflationary pressures and political instability.

But Nestle said on Thursday that it achieved a slight pick-up across all its markets in the third quarter and expects the trend to continue into next year.

The company's share price rose on the news and was up 2.9 percent by 1254 GMT, against a 1.9 percent rise on the European food sector index .

Investing in its strongest brands while divesting underperforming businesses, improving capital allocation and structural efficiency should help to drive growth and preserve margins, Chief Executive Paul Bulcke said at the company's headquarters in Vevey, Switzerland

Underlying sales, stripping out the effects of foreign exchange, acquisitions and divestments, grew 4.4 percent in the first nine months of the year, helped by improvements in all three of Nestle's geographical regions - Asia, Oceania and Africa, Europe and the Americas.

That was slower than the 6.1 percent in the same period last year and just below a 4.5 percent forecast in a Reuters poll, but it was slightly better than the 4.1 percent growth in the first half.

EUROPEAN IMPROVEMENT   Continued...

 
The Nestle logo is pictured on a truck outside the company's headquarters before the nine-month sale figures news conference in Vevey October 17, 2013. REUTERS/Denis Balibouse