Nestlé S.A. (OTC:NSRGF, VTX:NESN) shares sank to around a four-year low after the Nespresso and KitKat maker's underlying growth was down in the first three months of the year due to further softening of US consumer demand.
Organic growth for the quarter of 1.4% and 3.4% price growth was reported by the Swiss food and drink giant, whose huge portfolio of brands ranges from Perrier, San Pellegrino and Haagen-Dazs to Cheerios, Felix and Friskies pet-food and Maggi noodles.
Real internal growth (RIG) down 2%, with a negative impact from North America, was the key source of concern for markets, with forecasts having pointed to just a 0.5% decline.
"This is a notable miss on RIG," said analysts at Jefferies. They noted that Confectionary & Waters growth rates were helpfully better than expected, "but are possibly helped by Easter timing" for sweets, while waters "might suffer again" after reports this week on more closures taking place due to contaminations.
Nestlé CEO Mark Schneider said: "We had expected a slow start and see a strong rebound in RIG in the second quarter with reliable delivery for the remainder of the year. A wide range of growth initiatives across the group are now starting to deliver."
In North America, he said the group has stepped up "innovation intensity and commercial activities", primarily in frozen food, which lost ground in the first quarter.
He reiterated 2024 guidance and said the board "look ahead with confidence".
Jefferies said the consensus forecast was for RIG to grow over 2%, and "we see risk" to consensus sales and earnings estimates being downgraded today.
Shares fell 4% in early trading to €90 - the first time since the pandemic panic in March 2020, easing to a 3% decline as the session wore on.