Strong franc dents Nestl

Nestl, the Swiss-based food and beverage group, saw first-quarter results decline on the strong Swiss franc.

Sales eased 1.5 per cent to Sfr13bn (£7.1bn) compared with Sf13.2bn for the same period last year. The management blamed the volatility of exchange rates for the decline. A constant rate would have boosted sales about 8.5 per cent.

Sales for the year-end March 1994 also fell, to Sfr 56.89bn from Sfr57.49bn previously. Analysts said results were in line with expectations.

Helmuth Maucher, chief executive officer, said he expected currency fluctuations to impact sales in the coming year by 10-15 per cent.

In an effort to alleviate exchange rate pressure the company pushed up selling prices by as much as 4 per cent in some sectors. Instant coffee turned in the strongest performance despite a 2.7 per cent rise in the price. The US market, which accounts for about half of Nestl's roasted coffee sales, was less impressed and left the coffee on the shelf.

Total US sales dropped 4.4 per cent to Sfr12,216m.

Sales also slipped across Europe with the exception of Switzerland and Italy, where the group's acquisition of ice-cream maker Italgel in 1993 bumped up sales by 15.4 per cent. Switzerland turned in a rise of 0.5 per cent.

The group restated its intention to focus on internal growth, in developing and industrialised markets, although it did not rule out acquisitions.

Expansion into the Far East remains an important part of Nestl's strategy. Two new factories are due to open in China this year to produce condensed milk and ice cream with additional production units being added to manufacture soluble coffee and powdered milk.

Further launches are also planned for Hong Kong, Malasia and the Philippines.

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