Restructuring nocks Nestle SA’s operating margin by 15%


Nestle SA said its due to increased restructuring activity the trading operating profit margin decreased by 20 basis points in constant currency and by 30 basis points to 15.0% on a reported basis.

Underlying earnings per share increased by 3.4% in constant currency and by 2.1% to CHF 1.68 on a reported basis 2017 full-year guidance confirmed with organic growth likely to be in the lower half of the 2-4% range; stable trading operating profit margin in constant currency as a result of considerable increase in restructuring costs; underlying earnings per share in constant currency and capital efficiency expected to increase.

Mark Schneider, Nestlé CEO: “We are pleased with our value creation progress in the first half of 2017. This includes solid operational improvements as well as portfolio management choices and our decision to increase balance sheet efficiency.

Organic growth in the first half did not fully meet our expectations. While volume growth remains at the high end of our industry, pricing continues to be soft. Asia and Africa confirmed their positive growth momentum. Western Europe experienced a volume decline, which we consider largely transitory. North America and Latin America saw a slight improvement in organic growth, mainly driven by volume. Our coffee, water and petcare businesses confirmed their growth potential with solid first-half results.

Profitability is in line with our expectations, as restructuring savings and efficiencies have offset higher commodity costs. We are accelerating our margin improvement initiatives.

We confirm our 2017 guidance with organic growth likely to be in the lower half of the 2-4% range. Our 2020 mid-range expectations for organic growth remain unchanged.”

Leave a Reply

Your email address will not be published.