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Nestle confirms outlook as volume growth picks up

Bars of original KitKat chocolate, produced by Nestle SA.
Jason Adlen | Bloomberg | Getty Images

Food group Nestle confirmed its full-year guidance after organic sales growth accelerated to 2.8 percent in the first quarter of 2018, helped by improving volumes.

Packaged food companies have seen their sales slow as consumers prefer fresh foods, deemed healthier and more natural, and have reacted with cost-cutting measures, portfolio management and increasing innovation efforts.

The maker of KitKat chocolate bars and Maggi soups confirmed on Thursday its target to grow organic sales by 2-4 percent this year and improve its trading operating margin.

Quarterly organic growth of 2.8 percent, which strips out currency swings and portfolio changes, was ahead of the average estimate of 2.5 percent in a Reuters poll and up from 1.9 percent in the final quarter of 2017.

Volume growth picked up to 2.6 percent, from 1.2 percent in the final quarter of 2017, but prices rose by only 0.2 percent, Nestle said in a statement. Price pressures were illustrated by a price row with European retailers.

Growth in the Americas accelerated to 1.2 percent and Asia was also better than the previous quarter at 4.7 percent, while Europe, the Middle East and North Africa slowed to 2.2 percent, hit by declining prices, Nestle said.