Nestlé profits hit by strong euro and slower growth

Nestle chief warns company is facing a "very volatile trading environment"

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Nestlé has become the latest consumer goods giant to struggle in the face of a strong euro and slower growth, today revealing a near-10 per cent tumble in first-half profits.

The Swiss-based Nestlé reported a 9.6 per cent 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 per cent, from 1 per cent a year earlier. Sales in emerging markets improved with growth at 9.7 per cent, up from 8.2 per cent 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 per cent, 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 per cent stake in beauty group L’Oréal earlier this year.