‘Unprecedented’ foreign exchange storm hits Nestlé

By Rod Addy contact

- Last updated on GMT

Nestlé had its global headquarters in Switzerland
Nestlé had its global headquarters in Switzerland
Nestlé has been hit by ‘unprecedented’ foreign exchange issues, according to chief financial officer and executive vice president Wan Ling Martello.

Commenting on the food giant’s performance in the first half of 2014, Martello said it continued to struggle with low prices and poor consumer spending in developed markets, plus slow emerging market growth.

But he stressed: What has become more dramatic is the effect of foreign exchange. This has had a significant impact at all levels of our performance, from sales to profits to cash flow to earnings per share.

“You can see that it accounts for some 40 basis points of difference between our trading operating profit margin in constant currencies and our reported margin. A difference of that size is just unprecedented.”

Confidence in future

Reporting on its latest figures, the company also announced that it planned to complete the buy-back of shares worth eight billion Swiss Francs (£5.2bn) by the end of 2015. The company claimed the move demonstrated the confidence it had in its future performance.

Nestlé reported sales up 4.7% to 43bn Swiss Francs (£28bn) in the six months from January to June, despite the strong Swiss Franc heavily dampening that growth.

In Europe, sales had risen by just 0.6%, while the company delivered low single digit growth in its divisions in the Americas and Asia, Oceania and Africa.

Highest growth

In terms of product categories, the business claimed the highest growth in nutrition and healthcare, followed by water, then milk products and ice cream.

Nescafé Dolce Gusto had performed well and gained market share across Europe. It also boasted of good growth from its Wagner and Buitoni frozen pizza brands, Nescafé Gold soluble coffee, sauces and soups.

Sales of its Buxton mineral water brand had also achieved steady growth in the UK in the first half of 2014, it said.

It predicted 5% organic growth for the whole of 2014.

“We delivered solid, broad-based organic growth, driven by real internal growth and pricing in what is still a very volatile trading environment,”​ said Nestlé​ ceo Paul Bulcke. “We continued to drive the growth momentum with innovation, increased support behind our brands, and a focus on efficiencies.”

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