India, China give Nestle, Unilever headstart in Q1; post good volume growth

Nestle reported a 4.7 per cent sales growth for the Asia, Oceania, and Sub-Saharan African region for the January-March (2018) period, which was the highest among its three zones

The world's largest foods company Nestlé and the second-largest consumer goods major Unilever on Thursday announced their first-quarter results, posting a good volume growth, led by markets such as India and China.

Nestlé reported a 4.7 per cent sales growth for the Asia, Oceania, and Sub-Saharan African (AOA) region for the January-March (2018) period, which was the highest among its three zones. 

Americas (AMS) and Europe, West Asia, and North Africa (EMENA) constitute the other two regions for Nestlé, reporting 1.2 per cent and 2.2 per cent sales growth, respectively, for the quarter under review. 

India, which comes under South Asia, is a part of AOA. And Nestlé's global Chief Executive Mark Schneider said growth in South Asia was good, supported by innovation and renovation, particularly in Maggi and KitKat. Growth in China, on the other hand, also a part of AOA, was led by the Chinese New Year, he said.
 

“Our volume growth improved noticeably while pricing remained soft (in the first quarter)," Schneider said. "We are encouraged by our innovation pipeline, continued progress with the implementation of our portfolio management strategy, and our efficiency initiatives, which put us on the track for our 2018 guidance and our 2020 mid-term targets,” he added. 

Unilever, which opted to relocate completely to Rotterdam last month, giving up its London address, on Thursday said emerging markets, which includes India and China, saw sales growth of 5.3 per cent in the first quarter, led by a 4.3 per cent volume growth.

Growth in India, Unilever said, was broad-based, led by price reductions in some categories and benefits of the goods and services tax (GST), which were passed on to consumers. Growth in China, on the other hand, was driven by new product launches and strong e-commerce sales, the firm said.     

"The broad-based growth, including over 4 per cent volume growth in emerging markets, shows that the ‘Connected 4 Growth’ programme is working and enhancing our long-term compounding growth model. We are further improving the quality and speed of our global and local innovation and continue to expect underlying sales growth in the 3-5 per cent range for the full year (2018)," Paul Polman, chief executive officer, Unilever, said.

Polman added that for the 2018 accounting year, Unilever was expecting an improvement in underlying operating margin and cash flow and that it was raising its dividend by 8 per cent. Both Unilever and Nestlé follow a Jan-December accounting period. Nestlé derives around 45 per cent of its global revenue from emerging markets, while Unilever derives nearly 60 per cent of its overall revenue from the emerging markets.