Apr.15 - Currency movements drag on results for the world's biggest food company Nestle, and drugs company Roche. Ciara Sutton asks if the fluctuations could also impact other European companies.
The world's biggest food company is facing hard times. First quarter sales growth at Nestle slowed to 4.2 percent in local currencies. Sluggish growth in emerging markets and cold weather in North America were partly to blame, along with thrifty Europeans opting for cheaper brands. Concerns over currency movements are also growing, with the strengthening Swiss franc dragging on sales. BGC's Mike Ingram. (SOUNDBITE) (English) BGC MARKET STRATEGIST, MIKE INGRAM, SAYING: "A lot of these currencies that it is booking sales in, are devalued against the particularly strong Swiss frank, and also pricing competition in many of these markets is intense, because many many companies view emerging markets as the only growth opportunity out there so everybody is pitching for business." Sales in local currency terms rose to 23 billion dollars, short of analysts expectations. But Nestle says new products are helping to sustain growth and it's optimistic things will soon pick up. Adverse currency moves also weighed on first-quarter sales at Roche. They fell 1 percent, despite a healthy uptake of new cancer medicines. A weaker U.S. dollar, Japanese yen and Latin American currencies took their toll, shaving 6 percent off quarterly sales. Roche is the first major drugmaker to report this quarter and currency woes are expected to impact others too. (SOUNDBITE) (English) BGC MARKET STRATEGIST, MIKE INGRAM, SAYING: "With the euro at 138 perhaps 139, and the ECB desperate to talk it down but not really having much affect. One has to see if we are going to see continual hikes in the forecast exchange rate, and a continued downgrade in euro stoxx etf estimates." Roche is ramping-up new products to defend its market share. It hopes they will limit the impact from copy-cat versions of many of its older biotech drugs coming on the market.