The world's biggest food company Nestle posted Wednesday a 13.7 percent fall in first half net profit to 4.7 billion francs (€4.5 billion), hurt by the strong Swiss franc against most major currencies.

"/> The world's biggest food company Nestle posted Wednesday a 13.7 percent fall in first half net profit to 4.7 billion francs (€4.5 billion), hurt by the strong Swiss franc against most major currencies.

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ECONOMY

Strong franc dampens Nestlé profits

The world's biggest food company Nestle posted Wednesday a 13.7 percent fall in first half net profit to 4.7 billion francs (€4.5 billion), 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.

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ECONOMY

Why Switzerland continues to attract foreign companies despite the coronavirus pandemic

Despite the pandemic, 220 foreign businesses set up their offices in Switzerland in 2020.

Why Switzerland continues to attract foreign companies despite the coronavirus pandemic
Switzerland is a magnet for foreign companies. Photo by Valeriano de Domenico/AFP

While this number is 9 percent lower than in the previous year, these companies have created 11 percent more new jobs — a total of 1,168 — than in 2019. Most of the new jobs were created by companies from China, the United States and Germany.

About 3,600 more positions are expected to be offered by these enterprises in the next three years, according to data from SRF, Switzerland’s public broadcaster.

In fact, Switzerland is one of the very few countries that have been able to attract international companies to its shores in 2020, a notoriously bad year for the global economy.

READ MORE: Why Switzerland’s economy is on the up despite the coronavirus pandemic

Experts believe this is due to the country’s strengths, including political, economic and financial conditions.

“Even in a time of crisis, Switzerland scored thanks to its stability, predictability and security”, said Patrik Wermelinger, member of the executive board of Switzerland Global Enterprise (SGE), which promotes the country abroad on behalf of the federal government and the cantons.

There are also other reasons that had prompted foreign companies to come to Switzerland in 2020, despite the economic uncertainty and travel restrictions.

“Protection of legal rights, freedom, and personal responsibility are stronger in Switzerland than in many other countries, even in times of pandemic”, said SGE’s co-president Walter Schönholzer.

Switzerland’s attractiveness is also boosted by studies showing the country’s economy remains the strongest in the world.

Even though the health crisis plunged Switzerland’s economic activity into a “historic” 8.2-percent slump in the second quarter of  2020, the country still boasts the world’s most resilient economy, according to research by an insurance and reinsurance company Swiss Re. 

The International Monetary Fund (IMF) expects a 3.5-percent rebound in Switzerland’s gross domestic product (GDP) in 2021.

It said Switzerland’s economy absorbed the shock of the pandemic better than other European countries and it “has navigated the Covid-19 pandemic well”.

IMF added that Switzerland’s “early, strong, and sustained public health and economic policy response has helped contain the contraction of activity relative to other European countries”.

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