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Nestlé profit slides as strong Swiss franc bites

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Nestlé profit slides as strong Swiss franc bites
Nestlé headquarters in Vevey in the canton of Vaud. Photo: Nestlé
09:35 CEST+02:00
Swiss-based Nestlé, the world's largest food company, on Thursday reported that the strong Swiss currency took a bite out of net profits for the first half of 2014, which fell ten percent to 4.63 billion francs from the same period a year earlier.

The results were below the expectations of financial analysts.

The company, headquartered in Vevey in the canton of Vaud, also announced that it plans to buy back eight billion francs’ worth of its shares between now and 2015 to reduce its share capital by around 3.6 percent.

Nestlé said it achieved 4.7 percent organic growth in the first six months of the year but conceded it was operating in a “volatile trading environment”.

It said the strong franc had the effect of reducing sales (43 billion francs) by 8.8 percent.

Paul Bulcke, Nestlé CEO, said in a statement that the share buyback plan would provide “additional competitive returns for our shareholders.”

The Belgian expat said that in “constant currencies” the company is maintaining its outlook for five percent organic growth for the full year.

“We delivered solid, broad-based organic growth, driven by real internal growth and pricing in what is still a very volatile trading environment,” Bulcke said. 

“We continued to drive the growth momentum with innovation, increased support behind our brands, and a focus on efficiencies.”

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