Nestlé Maintains Focus on Profitable Growth

 Breaking News
  • Scottish Food and Drink Exports Hit Record £6 Billion Overseas Scottish food and drink exports were worth approximately £6 billion in 2017 – almost £570 million more than 2016. Food exports were valued at about £1.6 billion – a rise of 15% (£214 million) during the same period. Exports of food to Europe were worth £1.1 billion after an increase of 13%, or £125 [...]...
  • UK Casual Dining Contraction is Independents’ Opportunity With casual dining brands closing sites and scaling back expansion in the UK, well-run independent operators have an opportunity to take back market share, says buying specialist Lynx Purchasing. Operators who do their homework on the eating-out market, including implementing strong buying disciplines, can broaden their customer appeal, says Lynx Purchasing managing director Rachel Dobson. “Since the [...]...
  • AAK UK Opens First Customer Innovation Centre AAK UK has opened a new Customer Innovation Centre in Hull to take its co-development work with leading food brands to new levels of success. AAK, the UK’s leading manufacturer and supplier of edible oils, fats and semi-speciality oil ingredients, works in close partnership with some of the most famous names in food and bakery to [...]...
  • Marks and Spencer Selects Zetes to Transform Food Supply Chain Operations Marks and Spencer (M&S) has selected Zetes to help transform visibility and fulfilment across its fresh food supply chain. The partnership will also see greater collaboration between M&S and its food suppliers via Zetes’ supply chain visibility platform, ZetesOlympus. Through ZetesOlympus, M&S will gain real-time fulfilment performance insight across its fresh food supply chain. The platform will help M&S [...]...
  • Guinness Remains Ireland’s Most Valuable Brand at €2.1 Billion Guinness remains Ireland’s most valuable brand after growing by 5% over the last year to a brand value of €2.1 billion on the back of new product innovations and steady sales of the world-famous draught, according to the latest report by Brand Finance, the world’s leading independent brand valuation and strategy consultancy. Guinness’s brand value has [...]...

Nestlé Maintains Focus on Profitable Growth

Nestlé Maintains Focus on Profitable Growth
August 19
10:32 2016

Nestlé has reported 3.5% organic growth in sales to SFr43.2 billion (€39.9 billion) for the first half. A foreign exchange impact of -2.0% coupled with the net result of acquisitions and divestitures resulted in reported sales falling by 0.8%.

Organic sales growth was composed of 2.8% real internal growth and 0.7% pricing. However, pricing has reached a historically low level owing to deflationary environments across a number of developed markets and low commodity prices. Organic growth was broad-based across geographies and categories – 4.7% in the Americas (AMS), 2.5% in Europe, Middle East and North Africa (EMENA) and 2.3% in Asia, Oceania and sub-Saharan Africa (AOA).

Nestlé’s trading operating profit was SFr6.6 billion, with a margin of 15.3%, up 30 basis points on both a reported basis and in constant currencies. This was driven by a gross margin expansion of 130 basis points. Nestlé delivered this margin improvement whilst continuing to significantly increase investment in brand support, digital, research and development, and in its new nutrition and health platforms. Consumer facing marketing spend increased by 8.5% in constant currencies.

Nestlé is rolling out several key initiatives that are focused on structural efficiencies. One-off costs in 2016 will be off-set by savings.

Group operating cash flow was strong at SFr4.9 billion and free cash flow increased year on year by 41% to SFr3.3 billion. These improvements were primarily the result of Nestlé’s focus on margins, discipline in capital expenditure and working capital.

Paul Bulcke.

Paul Bulcke.

Paul Bulcke, chief executive of Nestlé, comments: “The first half of 2016 was in line with our expectation with growth almost entirely driven by volume and product mix, yielding further market share gains. While we continued to address challenges in China, we enjoyed good performances across the US, Europe, South East Asia and Latin America and expect this to continue in the second half. We also expect pricing, which reached historically low levels in the first half, to recover somewhat in the coming months.”

He adds: “We grew our gross margin and trading operating profit through further premiumisation, continuous cost discipline and input cost tailwinds. This allowed us to significantly enhance our free cash flow. In these times of rapid change, we keep our focus on profitable growth by further investing in innovation, R&D, brand support and digital to engage with our consumers, meeting their changing needs.”

Nestlé has confirmed its full-year outlook for organic growth in line with 2015, with improvements in margins and underlying earnings per share in constant currencies, and capital efficiency.

About Author



Related Articles

Food & Drink Business Conference & Exhibition 2016

Upcoming Events

  • March 18, 2018ProWein
  • March 21, 2018World Olive Oil Exhibition
  • March 28, 2018FOOD INDUSTRY
  • April 4, 2018The leading event for the snack and food-on-the-go market
AEC v1.0.4

find food jobs

The Magazine

F&D Business Preferred Suppliers

New Subscriber

Subscribe Here