Nestlé has reported weaker than expected first-quarter sales after a significant slowdown in Asian growth.
The Swiss food giant said underlying sales grew 4.3% to 21.9bn Swiss francs, which was below consensus expectations for 4.6% growth.
“We continue to expect some volatility throughout 2013 but reconfirm our expectation to deliver on our commitments for the full year: top line, bottom line and capital efficiency,” said Nestlé CEO Paul Bulcke. “We are outperforming the market in Europe where consumer sentiment remains low.”
Nestlé’s sales in Europe grew 1.5% to 3.7bn Swiss francs.
“It is noteworthy that Nestlé has now missed consensus expectations for three straight quarters…the first time this has occurred in the 11 years we have been covering it,” said Bernstein analyst Andrew Wood.
The cold spring weather in Europe affected water sales and growth in the Asia, Oceania and Africa (AOA) region slowed sharply.
Nestlé was hit earlier in the year by the destruction of a company factory in war-torn Syria. This had a negative impact but Wood said Nestlé had yet to fully explain why sales in the wider AOA region were so sharply down.
“We feel management has still not been able to adequately explain how a business that had been growing 11-12% for six quarters in 2011-2012 suddenly dropped to +5% in Q3 and has stayed in mid-single digits since,” he said.
Despite the weaker performance, Nestlé said it was sticking with its guidance for 5-6% underlying sales growth for the full year.
Earlier this week, rival Danone reported healthier underlying growth of 5.6%. Strong growth in sales of baby nutrition and waters outweighed continued weakness in dairy.
Nestlé shares fell 1% to 64 Swiss francs in early trading on Thursday.