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The currency problems hitting Nestle
Nestle is blaming the Swiss franc’s poor exchange rate for the company’s disappointing Q1 results.
With CHF 20.8 billion in revenue, Nestle reported its lowest level of sales since 2009. The company’s CEO, Paul Bulcke defended the results stating that organic growth was up and was “driven by volume rather than price.”
Erin Lash, Senior Equity Analysts at Morningstar, mentions that slow growth in emerging markets also contributed to the company’s lower than expected sales growth. With an 8.5 percent increase in emerging markets, this sector was responsible for offsetting slower growth in developed markets as consumer spending tightened.
Lash believes the company is still one that investors should consider keeping on their radar as the stock’s price hovers around its fair market value. The company’s willingness to divest underperforming brands and focus on innovation are also indicators of strong future growth.
01:29 minutes
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