Strong Swiss franc hits Nestlé profits for 2015

Swiss food giant Nestlé said on Thursday that its net profits plunged by 39 percent last year due in part to a strong Swiss franc.

Strong Swiss franc hits Nestlé profits for 2015
Photo: AFP

Net income for 2015 stood at 9.1 billion francs ($9.1 billion), lower than the 9.8 billion francs forecast by analysts and down from 14.5 billion francs in 2014.
The company said the lower net profits were “mostly due to the one-off impact from the disposal in 2014 of part of the L'Oréal stake”, which boosted revenues in that year.
The French cosmetics firm in 2014 bought back an eight-percent stake that Nestlé owned in L'Oréal, boosting the share of the family of heiress Liliane Bettencourt in the company to 33.3 percent.

Sales of 88.8 billion francs were 7.7 percent lower because of the impact of the strong franc.
But the Vevey-based firm said organic growth, the real measure of a company's performance, was good at 4.2 percent and was “supported by increased momentum in real internal growth combined with continued margin improvement,” according to chief executive Paul Bulcke.

“In 2015 we delivered profitable growth at the higher end of the industry in what is still a challenging environment,” Bulcke said in a statement. 

Investors responded negatively to the financial report driving down Nestle's share price more than three percent to 71.70 francs by early afternoon trading.

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‘Unlimited resources’: Switzerland’s Nestle goes vegan

Swiss food giant Nestle, which has made billions with dairy products, said Monday it will host start-ups that want to develop vegetarian alternatives.

'Unlimited resources': Switzerland's Nestle goes vegan

Nestle could thus find itself at the forefront of a sector that has strong growth potential, an analyst commented.

It plans to open its research and development (R&D) centre in Konolfingen, Switzerland to “start-ups, students and scientists” a statement said.

In addition to testing sustainable dairy products, the group plans to encourage work on plant-based dairy alternatives, it added.

Chief executive Mark Schneider was quoted as saying that “innovation in milk products and plant-based dairy alternatives is core to Nestle's portfolio strategy.”

The group unveiled a vegetable-based milk that had already been developed with the process, and technical director Stefan Palzer told AFP it planned to focus on 100-200 such projects a year.

Jon Cox, an analyst at Kepler Cheuvreux, noted that while Nestle had missed some consumer trends in the past, it has now “taken something of a lead in the plant-based alternative market for food”.

And “given its pretty much unlimited resources, Nestle is going to come out one of the winners in the space,” Cox forecast in an e-mail.

Nestle said that “internal, external and mixed teams” would work at the R&D centre over six-month periods.

Nestle would provide “expertise and key equipment such as small to medium-scale production equipment to facilitate the rapid upscaling of products for a test launch in a retail environment,” it added.

The Swiss food giant has long been known for its dairy products, but faced a boycott in the 1970s for allegedly discouraging mothers in developing countries from breastfeeding even though it was cheaper and more nutritious than powdered formula.

On Monday, the group's statement also underscored that the research initiative was part of its commitment to help fight global warming.

“As a company, we have set ambitious climate goals. This is part of our promise to develop products that are good for you and good for the planet,” it said.