Strong Swiss Franc Impacts Nestlé’s First Half Performance
Nestlé has reported a 4.8% drop in sales to SFr43 billion (Eur35.4 billion) for the first half of 2014 as the strong Swiss Franc continued to have a substantial negative impact on the group’s results. However, Nestle delivered organic sales growth of 4.7%, composed of 2.9% real internal growth and 1.8% pricing during the period.
Trading operating profit was SFr6.4 billion and the reported trading operating profit margin was 15.0% – down by 10 basis points – but was up by 30 basis points in constant currency terms.
Nestlé’s organic sales growth was broad-based: 4.9% in the Americas, 1.4% in Europe, and 7.5% in Asia, Oceania and Africa. Globally, the businesses in developed markets grew 0.6%, whilst emerging markets grew 9.7%. The real internal growth was 2.4% in the Americas, 2.3% in Europe and 4.2% in Asia, Oceania and Africa.
The newly established Nestlé Skin Health, based on the Swiss group’s Galderma business, will reinforce Nestlé’s long-term strategic ambition to be the leading nutrition, health and wellness company. This investment complements other value-added growth platforms in Nestlé’s portfolio including Nestlé Health Science, created three years ago to drive innovation in the area of personalised nutrition. Nestlé Skin Health has been further strengthened with the acquisition of the full rights to commercialise several key aesthetic dermatology products in the US and Canada.
Paul Bulcke (pictured), chief executive of Nestlé, comments: “We delivered solid, broad-based organic growth, driven by real internal growth and pricing in what is still a very volatile trading environment. We continued to drive the growth momentum with innovation, increased support behind our brands, and a focus on efficiencies.”
He continues: “The creation of Nestlé Skin Health with the Galderma business expanded our nutrition, health and wellness strategy, reinforcing our long-term strategic ambition to improve people’s lives through science-driven innovation.”
Nestlé plans to buy back SFr8 billion shares in a programme that will start this year and continue into 2015, providing additional competitive returns for shareholders.
Nestlé has confirmed its outlook for the full year – organic growth around 5% and improvements in margins, underlying earnings per share in constant currencies and capital efficiency.
