The maker of Kit Kat chocolate bars and Nescafé coffee has become the latest consumer goods giant to struggle in the face of a strong euro and slower growth, today revealing a near-10% tumble in first-half profits.
The Swiss-based Nestlé reported a 9.6% fall in net profit to SFr4.63 billion (£3 billion), missing analysts’ forecasts.
It said it would cut costs to improve margins after sales growth in developed markets slowed to 0.6%, from 1% a year earlier. Sales in emerging markets improved with growth at 9.7%, up from 8.2% last year — boosted by trade in South America and Africa, which offset difficulties in China.
The company’s chief executive, Paul Bulcke, said Nestlé faced a “very volatile trading environment”.
But he confirmed it would meet full-year targets of organic growth of around 5%, and improve margins through cost cutting and investment in innovation.
Nestlé’s competitors have also struggled with difficult trading conditions. Earlier this month, US rival Proctor & Gamble said it would sell nearly 100 underperforming brands, and Unilever and Nestlé have also sold off smaller labels recently to focus on core brands.
Nestlé also announced a SFr8 billion share buyback, following its sale of an 8% stake in beauty group L’Oréal earlier this year.
