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(Alliance News) - Swiss nutrition giant Nestle on Friday presented a similar business experience of the Covid-19 crisis as its Anglo-Dutch peer Unilever had on Thursday, with sales shifting to essentials from treats and to in-home products from cafe and office consumption.
Nestle said it remained "resilient" amid the pandemic in the first quarter, backing its full-year guidance despite a fall in sales.
Organic growth was 4.3% in the first three months of 2020, supported by strong momentum in the Americas. Total sales were down 6.2% to CHF20.8 billion, however.
A majority of markets, particularly North America and Europe, saw "significantly increased growth" in March, supported by stockpiling. China saw a sharp fall in sales due to movement restrictions which stretched almost the full quarter as well as limited consumer stockpiling.
Essential products saw increase demand, such as prepared dishes, Purina PetCare and coffee. Sweets and ice cream suffered a sales decline.
"All markets saw a significant shift from out-of-home to in-home consumption. Out-of-home channels posted negative growth, with significant sales declines for Nestle Professional, water and Nespresso boutiques. E-commerce sales grew by 29.4%, exceeding 10% of total group sales for the first time," Nestle commented.
As it is "still too early to assess the full impact from Covid-19", Nestle said it is maintaining its full-year guidance for the time being.
The company added that helping more than 200,000 dairy farmers in its supply chain by continuing to buy agreed volumes of perishable milk.
"Nestle has a special responsibility at this time. Our food and beverage products help keep people healthy, provide comfort and support recovery," said Chief Executive Officer Mark Schneider.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 1.4% at 5,742.48
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Hang Seng: down 0.5% at 23,870.16
Nikkei 225: closed down 0.9% at 19,262.00
DJIA: closed up 39.44 points, 0.2%, at 23,515.26
S&P 500: closed down 0.1% at 2,797.80
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GBP: down at USD1.2324 (USD1.2391)
EUR: down at USD1.0758 (USD1.0835)
Gold: down at USD1,728.50 per ounce (USD1,737.15)
Oil (Brent): down at USD21.60 a barrel (USD22.78)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Friday's Key Economic Events still to come
1000 CEST Germany Ifo business climate index
0830 EDT US advance report on durable goods
1000 EDT US University of Michigan survey of consumers
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Retail sales in the UK saw the sharpest fall on record last month as clothing sales plunged by a third, according to new figures. The Office for National Statistics said total sales volumes dived 5.1% as many stores shut their doors in the face of the coronavirus. It added that clothing store sales saw a particularly sharp fall when compared with February, moving 35% lower. Meanwhile, food stores reported their strongest growth on record in March, as sales jumped 10% with shoppers stocking up on essential groceries. Supermarkets saw sales volumes increase by 10% while alcohol-focused stores saw a 31% surge in volumes. Meanwhile, the ONS said the total value of online food sales in March was more than double the same month last year.
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UK consumer confidence is sitting just above a historic low recorded in 2008, according to an index. The overall index score for data analysis business GfK's UK consumer confidence index in April was minus 34 – just five points above a low of minus 39 in July 2008. The index, which surveyed more than 2,000 people between April 1 and 14, asks people how they feel about their personal financial situation, the wider economy and their attitude towards making major purchases. While perceptions were negative in April, people appeared to have become slightly less downbeat about their expectations for their personal finances in 12 months' time, compared with the days around the start of the lockdown, imposed to help limit the spread of coronavirus. A score of minus 14 was recorded on this measure, compared with a more negative score of minus 17 when a similar survey took place between March 16 and 27.
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BROKER RATING CHANGES
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GOLDMAN CUTS HIKMA PHARMA TO 'NEUTRAL' ('BUY') - TARGET 2400 (2200) PENCE
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JEFFERIES CUTS DIAGEO TO 'UNDERPERFORM' (HOLD) - PRICE TARGET 2200 (2800) PENCE
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JEFFERIES RAISES BEAZLEY TO 'BUY' ('HOLD') - TARGET 575 (611) PENCE
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COMPANIES - FTSE 100
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Housebuilder Persimmon said it will begin a phased re-opening of its construction sites, starting Monday. The move follows similar announcements on Thursday by peers Taylor Wimpey and Vistry. Persimmon noted it has developed and tested a range of new site protocols to enable work to recommence. Chief Executive David Jenkinson said: "The UK government has been very clear on the importance of the construction sector to the UK economy and its desire to see activity continue through the current period of crisis, provided appropriate public health measures are adopted." The housebuilder also said it has achieved about 820 gross private sales in the five weeks to April 19, as its sales staff continues to work from home. Cancellation rates remain at historically low levels, Persimmon added.
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Luxury fashion designer Burberry said its trench coat factory in Castleford, West Yorkshire is now manufacturing non-surgical gowns and supplying them to the UK National Health Service. The company also is sourcing surgical masks through its supply chain and supplying them to the NHS and charities such as Marie Curie, Burberry said. To date, Burberry has donated more than 100,000 pieces of personal protection equipment.
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Pearson said its trading in the first quarter was in line with its revised expectations, with revenue falling 5% year on year in the period. Pearson blamed Covid-19 for the slip, and noted if social distancing is prolonged significantly, its North American and International Courseware businesses will see a "more pronounced effect" as campuses and schools remain closed for longer. In the recent quarter, Global Assessment revenue declined 3%, International revenue by 10%, and North American Courseware revenue by 10%. The lone bright spot was Global Online Learning, where revenue grew 6%. At the end of the quarter, Pearson had "significant" financial headroom, with immediately available liquidity of about GBP800 million. Pearson had previously proposed a final dividend for 2019 of 13.5p, which shareholders will vote on at Friday's AGM.
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Blue-chip pharma giant AstraZeneca said its Lynparza treatment produced positive results in its Phase III PROfound trial - which is focused on men with metastatic castration-resistant prostate cancer. Astra, which develops the drug with MSD, said the trial showed a statistically significant and clinically meaningful improvement in the key secondary endpoint of overall survival.
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COMPANIES - INTERNATIONAL
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Intel reported a surge in first-quarter net income as an increase in working from home due to the Covid-19 pandemic led to good demand in its PC unit. Revenue was up 23% on a year ago in the three months to the end of March at USD19.83 billion, while net income surged 42% to USD5.66 billion. Net income was boosted as gross margin strengthened to 60.6% from 56.6%. Earnings per share for the period rose 51% to USD1.31. Intel, which is known for its computer processors, achieved 34% data-centric revenue growth and 14% PC-centric revenue growth in the quarter, with the PC business exceeding expectations as a rise in working from home drove CPU demand. For the second quarter, revenue is expected around USD18.5 billion and earnings per share USD1.04. Intel said it is not providing guidance for the full-year given "significant economic uncertainty".
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Vinci reported flat revenue for the first quarter of the year, with Concessions slightly higher and Contracting revenue a hair below, but foresees a "pronounced decline" in the year ahead. Total revenue for the three months ended March 31 was EUR9.69 billion, flat from the year before, the Paris-headquartered company said. Vinci - which develops, finances, and operates airports - posted a 2.4% rise in Concessions revenue to EUR1.70 billion from EUR1.66 billion while Contracting revenue was 0.3% below the previous year at EUR7.96 billion from EUR7.98 billion. On a like-for-like basis, total revenue was 3.3% lower, with Concessions revenue down 6.3% and Contracting revenue down 2.4%. "The pandemic is having a significant impact on the activities of all group business lines, in both Concessions and Contracting," said Chair & Chief Executive Xavier Huillard said, adding: "We expect a pronounced decline in the group's revenue in the next few months."
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Friday's Shareholder Meetings
HSBC Holdings
Pearson
ITV
Senior
St Modwen Properties
AssetCo
Rotork
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By Tom Waite; thomaslwaite@alliancenews.com
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