MarketPulse Europe - Nestle Shows Where the Growth Is

Investing.com -- It’s all about growth.

On a day when Europe’s largest economy confirmed it didn’t grow at all in the last quarter of 2018, shares in Nestle (SIX:NESN) rose over 2.9% to an all-time high, as it posted its first rise in organic sales growth in six years.

The company’s turnaround under CEO Marc Schneider appears to be gathering pace as it adapts to changing consumer tastes and sheds underperforming assets. That means there’s more money for shareholders, earlier than they expected: Nestle is raising its dividend by 4% and accelerating its 20 billion-franc stock buyback program.

While Nestle’s figures owe a lot to company-specific actions such as disposals and more leverage, they reflect a trend that is fast becoming one of the themes of 2019: the more sales you have outside of a stagnating Europe, the better are your chances of growing.

Nestle is following where Europe’s luxury goods makers – who make most of their money in North America and China - have led so far this year. Nestle too said that growth was strongest in the U.S. and Asia.

Contrast that with the news on the home front: Germany’s fourth-quarter gross domestic product growth was revised to zero Thursday. Elsewhere in Europe, domestic-focused sectors like banks are trailing local markets in both Spain and Italy this morning (although Commerzbank (DE:CBKG), a domestic-focused German bank, has bounced 2.7% after beating some very low expectations).

But hopes on an agreement in the U.S.-China trade dispute continue to support the general mood: the broad-based Euro Stoxx 600 was up 0.5% at 366.74, while Germany’s DAX was up 0.5% at 11,216 and the U.K. FTSE 100 was up 0.4% at 7220.03

Elsewhere, Airbus (PA:AIR)soared 5.3% after it said it would end production of A380 superjumbo, while Juventus (MI:JUVE) was up 1.1% after it successfully sold 175 million euros of bonds at a rate of around 3.5%, allowing it to repay more expensive bank loans. That’s despite the bonds not carrying a rating.

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