Food company Nestle sees sales rise 4.2 per cent in Q1 despite weak prices in Europe

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FRANKFURT – Food company Nestle SA says sales rose 4.2 per cent in the first quarter compared with a year ago despite deflationary pressures in Europe.

The Switzerland-based maker of Lean Cuisine, Nespresso and Haagen-Dazs said Tuesday that sales of 20.8 billion Swiss francs ($23.7 billion) were held back by a strong franc and by a flat retail environment that is keeping prices down in Europe. Sales there fell 0.8 per cent.

Candy sales were reduced by a later Easter, which pushed sales of sweets into the second quarter.

CEO Paul Bulcke said the first quarter increase was consistent with the company’s forecasts and was “driven by volume rather than by price.” He reaffirmed the company’s sales target of 5 per cent growth for this year, saying that sales performance would be “weighted to the second half.”

Chief Financial Officer Wan Ling Martello said on a conference call with analysts that “we do expect some pricing pickup by the end of the year” in Europe.

Low annual inflation of only 0.5 per cent in the 18 countries that use the euro has raised fears the currency union might fall into crippling deflation, a chronic downward price spiral that hurts growth and jobs.

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