Nestle Records Q1 Sales Increase, Stock Is Slightly Up

The biggest rise in the quarterly sales at Nestle ADR (OTCMKTS: NSRGY), the Swiss multinational food and drink processing conglomerate corporation, has been attributed to her external publics, such as coffee drinkers, pet owners, and home bakers as the firm has reported that its Q1 total reported sales increased by 1.3% to 21.1 billion Swiss francs from 20.8 billion Swiss francs recorded in 2020.

Despite the COVID-19 pandemic, the company still recorded huge sales in packaged foods, and its Starbucks at-home coffee brightened up the total lockdown. The company’s health science business benefited from the high sales as people consume more vitamins and supplements. So is the e-commerce business with sales around 40% higher.

Kepler Cheuvreux analyst Jon Cox described it as a huge recovery happening since a decade, according to him this is “the strongest quarterly number since 2011.” Another analyst, Bernstein’s Bruno Monteyne was able to describe the figure as an “amazing beat”.

Currently, shares of Nestle have risen above 2% in the year. It is outshining the European food sector by 3.2%. The company recorded 3.6% organic sales in 2020. In the first quarter of 2020, organic sales were 4.3%, and it has grown tremendously to 7.7% in this year’s first quarter, validating the forecast of 3.3% growth for the company. At the time of writing, after the Q1 earnings announcement, Nestle stock is nearly 1% up.

There was strong growth in the two continents, America and Asia that the COVID-19 pandemic first struck, though Europe also recorded a 4.4% rise. In the analysis of the growth, Coffee was the major contributor. According to Nestle, Nespresso coffee, dairy rising, and petcare all rose by 17%, 16%, and 9% respectively.

Other businesses of the company whose services are hotels, cafeterias, restaurants saw low sales of 11.6%, an impressive performance compared to a 30% drop in 2020. In its plan to progress, the company has expressed readiness to reshape its businesses, by expanding health and wellness foods, and withdraw from businesses that are not performing.

The effects of COVID-19 on the Group’s organic growth in 2020 varied by product category. Demand for at-home consumption, trusted brands and products with nutritional benefits was strong. Purina PetCare, dairy, coffee at-home and Nestlé Health Science reported robust growth.

Sales in confectionery and water decreased, reflecting their high exposure to out-of-home channels and on-the-go consumption. Also, Retail sales posted high single-digit organic growth, reflecting elevated demand for at-home consumption. Sales in out-of-home channels declined significantly.

“Retail sales saw solid growth and out-of-home channels saw signs of improvement. We confirm our guidance for the year and our mid-term outlook for sustained mid-single-digit organic growth,” said Mark Schneider, Nestlé CEO.

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