Nestle scores third-quarter sales gains

by Keith Nunes
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VEVEY, SWITZERLAND — Consolidated sales of the Nestle Group reached CHF67.7 billion ($52.4 billion) during the first nine months of 2005. Real internal growth accelerated to 4%, while pricing, at 2%, was also higher than in the first half, resulting in organic growth of 6%. The company’s core food and beverage businesses achieved real internal growth of 4% and organic growth of 6%.

"The acceleration in our core food and beverage operations was broad-based and, together with the performance of Alcon, allows me to reconfirm that we will deliver 5% to 6% organic growth for 2005," said Peter Brabeck-Letmathe, chairman and chief executive officer. "We can also announce a new share buy-back program, subject to board approval."

The 6% organic growth of the food and beverage business was achieved through an emphasis on the successful extension of distribution beyond the traditional supermarket grocery channel, Mr. Brabeck-Letmathe said. The company also is making effective use of consumer insight to build both a strong pipeline of product innovation and dynamic, consumer-relevant communication.

Nestle’s European zone reported growth of 2%, a slight improvement on the first half of the year. Western Europe's growth rose slightly, to 1%, in spite of continued challenging business conditions in some areas. Nestle Purina PetCare Europe and Great Britain did well in Western Europe, according to the company. Eastern Europe reached 5% organic growth, with Russia continuing to be held back by the restructuring of the distribution network there. Russia is expected to return to normal growth rates in 2006.

In the Americas, growth remained impressive at 7%. There were good performances in the U.S. and Canada, Mr. Brabeck-Letmathe said, with the Nestle Prepared Food Company, Nestle Purina PetCare North America and Dreyer’s Grand Ice Cream Holdings doing particularly well. The company’s Latin American businesses grew 9%, due to accelerated expansion in the Brazilian market.

Nestle Waters’ business grew 8%. Although Europe was flat, North America and the rest of the world experienced strong sales gains.

The company reaffirmed its outlook of 5% to 6% organic growth in 2005.

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