Nestle SA’s share price down, posts decreasing sales and worst first-quarter profit since 2009

The largest food company in the world – Nestle SA – made a statement today, revealing its worst first-quarter sales growth since 2009. The company announced that its sales increased by 4.2% excluding acquisitions, divestments and currency shifts in the first quarter of the current financial year.

The result matched the median analyst forecast and can be attributed to a slowdown in emerging markets. The price pressure in Europe, which is at the weakest level in almost four years, also influenced Nestle SAs performance in the three months ended March 31st.

Mr. Paul Bulcke, the Chief Executive Officer of Nestle SA said in the statement, which was cited by CNBC: “Our organic growth in the first months of the year was in line with expectations and driven by volume rather than price. The continued roll-out of new products, along with good execution, sustained this growth in difficult market conditions. We expect the continued strengthening of the Swiss Franc to have a negative impact on reported sales.”

The sales of the company decreased to 20.82 billion Swiss francs (23.67 billion dollars), which is less than the 21.94-billion-franc sales posted for the same period of the fiscal 2013. The figures are way below the long-term target of the company, which is between 5 and 6%. Nestle also revealed that its business is experiencing deterioration in two of the three geographic regions where it operates.

Nestle SA also confirmed its projections for 2014. The company expects its revenue to increase by about 5% during the fiscal year, adding that it believes the results that are to be posted in the second half of the year will be better than the ones from the first half of 2014.

One of the analysts, who work for Societe Generale – Warren Ackerman commented in a note, which was cited by Bloomberg: “Europe remains weak with pricing still negative. Southern Europe continues its recovery but Northern Europe is slowing.”

Nestle SA was 0.22% down today, marking a one-year change of +2.21%. The 27 analysts offering 12-month price targets for Nestle SA have a median target of 70.00, with a high estimate of 78.00 and a low estimate of 57.00. The median estimate represents a 4.56% increase from the last price of 66.95.