Source: Sharecast
The Swiss food giant maintained its full-year guidance despite continued macroeconomic pressures and a significant foreign exchange drag.
It said the organic sales growth, which excluded currency effects and acquisitions, was driven by a 2.7% rise in pricing, while real internal growth - reflecting volume and mix - was marginal at 0.2%.
Total reported sales declined by 1.8% to CHF 44.23bn (£41.09bn), impacted by a 4.7% negative currency effect due to the strengthening of the Swiss franc.
Underlying trading operating profit fell 7.1% to CHF 7.29bn, with margins narrowing to 16.5% amid higher input costs and increased investment in marketing and innovation.
Net profit dropped 10.3% to CHF 5.07bn, while free cash flow declined sharply by 42% to CHF 2.31bn.
Freixe, who took the helm last year, said Nestlé was executing a strategy focused on accelerating category growth, improving execution, and boosting efficiency.
“Where we are investing to accelerate category growth, we are growing four times faster than the group,” he noted.
Six key innovation initiatives contributed over CHF 200m in first-half sales.
However, performance in Greater China weighed on results, shaving 70 basis points off group organic growth.
Nestlé said it was taking "decisive action" in the region, which would act as a growth headwind over the next year.
The company also announced a strategic review of its underperforming vitamins, minerals and supplements (VMS) portfolio.
That included the potential divestment of mainstream and value brands such as Nature’s Bounty, Osteo Bi-Flex, Puritan’s Pride, and US private label operations.
Nestlé said it would concentrate its VMS efforts on premium brands going forward.
Despite economic uncertainties and ongoing inflation, the company reiterated its 2025 guidance.
It said it expected organic sales growth to accelerate through the year, with an underlying trading operating profit margin at or above 16%.
The results could offer some relief to CEO Freixe as he looked to regain investor confidence and narrow the company’s performance gap with peers like Unilever and Danone.
Nestlé’s shares were up 4% so far this year, but remained under pressure amid ongoing concerns about the company’s governance and strategic direction.
At 1158 CEST (1058 BST), shares in Nestle were down 4.91% in Zurich, at CHF 73.93.
Reporting by Josh White for Sharecast.com.