GENEVA — The Swiss food and drinks giant Nestlé posted a 3.7 percent rise in first-half profits Thursday, but warned it would not be easy sticking to its sales targets as it tackled slowing markets around the world and “value-conscious” consumers.
Investors sent shares down 2.2 percent, to 63.30 Swiss francs on Thursday, after Nestlé released its first-half statement showing that underlying sales growth was at its lowest in four years.
Based in Vevey, Switzerland, Nestlé is the world’s biggest food and drink company by revenue and the maker of dozens of household name brands like Nescafé, Haagen Dazs, Jenny Craig and KitKat. It also is a major buyer of food commodities, and its results can serve as an indicator of the entire food industry, worldwide consumer demand and health of the global economy.
Nestlé said it had first-half profits of 5.1 billion Swiss francs ($5.5 billion) in the January-to-June period, up from a restated 4.9 billion francs in the same period last year.
Underlying sales growth fell to 4.1 percent for the first six months of the year, down from 6.6 percent in the comparable period a year earlier. In 2011, its first-half rate was 4.8 percent; in 2010, it was 6.1 percent. But midway through 2009, amid a global financial crisis, its growth rate fell to 3.5 percent.
The company said it expected first-half momentum in so-called organic growth to continue in the second half, however, increasing to about 5 percent. The Nestlé model calls for the company to sustain a 5 to 6 percent rate of organic revenue growth.
“It’s not going to be easy. It’s going to be a stretch,” the chief financial officer, Wan Ling Martello, said in a teleconference.
With consumers struggling in both Europe and emerging markets, Nestlé said its growth in developing markets slowed to 8.2 percent, down from 12.9 percent during the comparable period a year ago, while growth in developed markets fell to 1 percent, down from 2.6 percent last year.
Article source: http://www.nytimes.com/2013/08/09/business/nestle-reports-a-profit-but-warns-of-slowing-sales.html?partner=rss&emc=rss