Nestle posts 13.7% drop in first half profit
The world's biggest food company Nestle posted Wednesday a 13.7 percent fall in first half net profit to 4.7 billion francs ($6.5 billion, 4.5 billion euros), hurt by the strong Swiss franc against most major currencies.
Sales also fell 12.9 percent to 41 billion francs for the six months ending June, as the foreign exchange rate had a negative impact of 13.8 percent.
Nestle chief executive Paul Bulcke described the business environment as "extremely tough, volatile and competitive," given the economic instability, rising raw material prices and the strong Swiss currency.
Nevertheless, "we managed to drive growth not only in emerging markets but also in developed countries, especially in Europe," he said.
Europe contributed 7.5 billion francs in sales, 4.1 percent more compared to a year ago, with ice cream proving popular in the region.
Countries including France, Italy and Greece all showed growth and demand was also strong in Ukraine and the Adriatic region, said Nestle.
In the group's biggest market, North America, sales were up 5.6 percent at 12.8 billion francs with demand for pizza high.
Asia, meanwhile, continued to post strong revenue growth of 11.7 percent to 7.5 billion francs.
Nestle noted however that given the current economic instability, as well as acquisitions such as its recent commitment to buy a majority stake in Chinese sweetmaker Hsu Fu Chi for 1.4 billion francs, the group would hold on to spare cash and would not launch a new share buyback programme.
© 2011 AFP