Nestlé aims to keep up sales momentum for year

Nestlé beat analysts' forecasts with a 6.5% rise in underlying first-quarter sales today and was upbeat about the rest of the year.

The world's biggest food group, which makes of Nescafé coffee, Gerber baby food and KitKat chocolate, saw growth from all its regions and categories in the first three months of 2010.

The Swiss company said it had kept up the sales momentum from the latter part of 2009 with growth in western Europe and other developed markets accelerating, while growth in its emerging market operations topped 10%.

"Our strong sales performance in the first quarter confirms we are capturing opportunities in our different growth pillars, both in emerging and developed markets, even in a global economic environment which remains challenging," said chief executive Paul Bulcke.

The first-quarter 6.5% rise in underlying sales beat analysts' average estimate of 5.1%, with overall group sales rising 4.4% to SwFr26.3 billion.

Nestlé stuck to its forecast of higher growth in 2010 from its core food and beverage business, compared with 3.9% growth in 2009, and for a rise in operating margins in constant currencies from 2009's 14.6%.

Nestlé is focusing on its core food and drink business which sells Perrier water, Buitoni sauces and Carnation milk after agreeing this year to sell off its remaining stake in American eyecare group Alcon.

The group has plenty of firepower with $28 billion (£18 billion) from the Alcon sale, and swallowed up Kraft's North American pizza business for $3.7 billion (£2.4 billion) in January, which helped Kraft in its bid for Cadbury.

But Nestlé has emphasised its preference for share buybacks, saying that once its SwFr25 billion programme is completed it will launch a further SwFr10 billion buyback, while keeping quiet about potential acquisitions, such as buying up L'Oreal, in which it has a 30% stake.