Nestle has blowout quarter as restaurants start reopening

The 7.7% adjusted sales increase in the first quarter is the fastest in a decade, according to Sanford C Bernstein.

ZURICH: Nestle SA sales grew more than twice the rate analysts expected as the Swiss food giant sold more Nespresso capsules to people working from home while restaurants stocked up as they started reopening.

The 7.7% adjusted sales increase in the first quarter is the fastest in a decade, according to Sanford C Bernstein. That sets Mark Schneider up to reach his long-term goal of annual mid-single digit growth four years after he became chief executive officer. The stock rose as much as 2.9% to a record.

Growth was broad-based geographically, with a surge in China making Asia its best-performing region. Shoppers in the United States stocked up on Stouffer’s and Lean Cuisine convenience meals, while Nescafe and Starbucks coffee products were strong in Europe. E-commerce gained 40% and now the KitKat maker gets about a sixth of its sales from online.

Analysts will probably increase their organic-sales estimates to the higher end of a 4% to 5% range, according to Cedric Besnard, an analyst at Citi.

Nestle’s report is one of several signals that a consumer rebound is in full swing. Hermes reported a 44% boost to first-quarter sales Thursday, while Pernod Ricard SA forecast earnings growth of about 10% this year, helped by better-than-expected revenue.

“The debate this morning will be around why guidance isn’t being upgraded, given that solid mid-single digit growth for the year now looks well within reach, ” said Bruno Monteyne, an analyst at Bernstein. In February, Schneider said sales growth may cross the threshold of 4% this year. ─ Bloomberg

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