Nestlé confirms outlook while sales growth slows in Q1

Food group Nestle has confirmed it aims to grow underlying sales by 2-4% this year after growth slowed in the first quarter, hit by weak consumer demand for packaged foods and a deflationary environment.

Underlying "organic" sales growth at the maker of Buitoni pasta and Maggi soups slowed to 2.3% in the first quarter, from 3.9% in the year-ago period that included one more trading day and an earlier Easter, the group based in Vevey on Lake Geneva said in a statement on Thursday.

This was in line with forecasts in a Reuters poll. Consumer goods groups face challenges as increasingly health-conscious consumers often prefer fresh produce to packaged foods.

This is pushing the world's biggest food group to make its products healthier by cutting back on sugar, salt and fat and build up the business of foods with health benefits. 

In order to drive future profitability, it plans to increase restructuring costs considerably in 2017. As a result, the trading operating profit margin in constant currency is expected to be stable. Underlying earnings per share in constant currency and capital efficiency are expected to increase.

Mark Schneider, Nestlé CEO said, "Organic growth of 2.3% this quarter is within our full-year guidance range. The leap year comparison and other seasonal effects made the start of this year particularly challenging. We were encouraged by the growth in Asia and the resilience of consumer spending in Europe. Consumer demand in the Americas remained soft. Our pricing improved moderately."