Nestlé sales rise 2.2 percent

(Reuters) – Swiss-based Nestlé SA, the world's biggest food company, said on Wednesday that sales in the first 10 months of 1999 rose by 2.2 percent to SFr60.5 billion ($38.9 billion).

(Reuters) – Swiss-based Nestlé SA, the world’s biggest food company, said on Wednesday that sales in the first 10 months of 1999 rose by 2.2 percent to SFr60.5 billion ($38.9 billion).

Nestlé said that group sales and profit should rise in 1999, forecasting consolidated sales of more than SFr73 billion. “Profits should grow at a rate corresponding at least to the growth of sales,” it said in a statement.

It had said in September it expected to boost turnover and profit from last year, when it generated net profit of SFr4.29 billion on sales of SFr71.75 billion.

Analyst Doriana Russo at Salomon Smith Barney said the figures were “very much” in line with expectations.

James Amoroso at Bank Julius Baer said Nestlé had shown “good, solid progress.” The increase in sales also reflected a recovery from a drop in the second half of last year in the wake of the economic crisis in Asia.

“If people were nervous about the numbers following the Unilever disappointment, there was no reason. The (Nestlé) numbers were good, but not better than expected,” he said. Amoroso said he would not change his full-year forecast or share rating on the basis of the report.

He said the stock still looked expensive, adding that for him, fair value lay at SFr2,750. He rated the share “reduce.”

Nestlé peer Unilever NV/Plc, the Anglo-Dutch consumer products group, said earlier this month pre-tax profit fell 19 percent in the third quarter in the face of competitive pressures.

Analyst Christoph Streit at Bank Leu said the outlook for the full year at Nestlé was in line with what the company said at the half year.

Streit said he expected full year net profit to rise by three to five percent. He added the 10-month figures should be slightly positive for the share, especially in the face of the Unilever disappointment.

Detailing the 10-month sales figures, Nestlé said real internal growth was three percent. Exchange rates had a negative impact on sales of 2.4 percent, but acquisitions contributed a net one percent and price changes added 0.6 percent to the sales total.

Overall, on the basis of comparable structures and assuming constant exchange rates, sales were up 3.6 percent.