Investing.com -- Nestle (SIX:NESN) has reported a steeper than anticipated decline in first quarter sales volumes, as the Nescafe owner was hit in part by a slowdown in consumer spending on frozen foods in North America.
Real internal growth, a measure of sales volumes, fell by 2.0% in the three month period at the KitKat maker, below analysts' expectations for a decline of 0.5%.
Organic sales increased by 1.4% versus consensus forecasts of 2.9%, while total group pricing edged up by 3.4%.
In a statement, Chief Executive Mark Schneider said that demand for frozen food "lost ground" in North America, in a possible sign of what he described as an ongoing "bifurcation" in U.S. shopper habits. Consumer goods firms have said that while cost-conscious lower-income customers are focusing on bargains, price hikes have helped to support the creation of more expensive products that are being snapped up by wealthier shoppers.
Demand for items in the middle, which in North America includes frozen foods, has subsequently been depressed.
Nestle backed its full-year outlook for organic sales growth of around 4% and a "moderate increase" in underlying trading operating profit margin. Underlying earnings per share in constant currency is also seen rising by 6% to 10%.
"We had expected a slow start and see a strong rebound in [real internal growth] in the second quarter with reliable delivery for the remainder of the year," Schneider said. "A wide range of growth initiatives across the Group are now starting to deliver."
However, analysts at Citi flagged that they would expect investors to "remain sceptical" until Nestle can show "tangible" improvement in its North American operations.
Switzerland-listed shares in Nestle fell in early trading on Thursday.