Nestlé profit tumbles by half

The strong Swiss franc has hit Nestlé sales Keystone

First-half profit at the Swiss food multinational, Nestlé, tumbled by more than 50 per cent compared with the same period last year.

A statement from the company’s headquarters in Vevey said net income was SFr2.78 billion ($2 billion), down from SFr5.656 billion a year ago.

However, Nestlé commented that last year’s figure had been boosted by non-trading items including the partial stock offering of its Alcon eye care unit.

It pointed out that underlying earnings were up by 4.9 per cent in Swiss francs and that there had been a “strong” organic growth of 5.5 per cent.

Organic growth is Nestlé’s benchmark figure which removes the effects of exchange rates and acquisitions.

Negative currency impact

Sales for the period were down 6.3 per cent to SFr41.4 billion due to the strong Swiss franc, the company said. There was a negative currency impact of 12.6 per cent.

The company said that with a sales growth of 6.3 per cent at constant exchange rates, it continued to grow faster than the food industry.

Nestlé chief executive Peter Brabeck indicated that he was satisfied with the group performance.

“Nestlé is demonstrating that it is able to grow and improve its performance even in a very challenging environment and with a continued strong Swiss franc,” he commented.

“In 2003 management is concentrating on operational efficiency and we are pleased to see the results at half year,” he added.

Brabeck said that the company was looking forward to a “somewhat more favourable” trading environment for the second half-year.

He added that he was confident organic growth of between five and six per cent could be achieved for the year as a whole.

“Nestlé’s broad presence across geography and businesses positions it well to take advantage of any improvement in the economic climate,” he said.

swissinfo with agencies

In brief

The first-half profit at Nestlé fell by 50.85 per cent to SFrSFr2.78 billion ($2 billion).

But underlying earnings were up by 4.9 per cent and the company reports strong organic growth of 5.5 per cent.

Chief executive Peter Brabeck is pleased with the first-half figures.