Nestlé reveals drop in half-year results, despite confectionery segment gains

Nestlé has released its latest half-year results showing a 1.8% drop in group sales for the period, to  CHF 44,2 billion, despite a slight upturn in performance for its confectionery interests, reports Neill Barston.

The company’s CEO, Laurent Freixe moved to assert that the company had focused on improving areas of the business that had been underperforming, against a backdrop of market uncertainties.

Confectionery sales were put at CHF 3.9 billion for the first half of the year, up from CHF 3.8 billion for the same period last year, with the business citing its flagship KitKat as a key driver of its performance within the category.

As for its broader results, net profits for the first six months across the group stood at CHF 5.1 billion, against CHF 5.6 billion for the same period last year, as the business continued to grapple with turbulent trading conditions.

The company’s organic growth rates were put at 2.9%, with the business adjusting pricing by 2.7% in relation to higher costs for its coffee and cocoa supplies around the world.

Consequently, real internal growth was put at 0.2%, which the company acknowledged had reflected weaker consumer demand, as shoppers have increasingly sought to assess their spending patterns amid constrained household budgets.

However, in terms of regions, the group reported encouraging signs within its EMEA markets, with Turkiye, Iberia, Nordics and France recording positive results, with confectionery posting mid single-digit improvements. 

In North America, its organic growth was put at 0.3%, while in Latin America, the figure stood at 5.5%, with confectionery achieving double-digit growth for the business – the company has particularly strong assets in Brazil, where it finally took control of the regional Garoto brand in 2023, after a major twenty-year investigation into the deal on commercial grounds of potentially creating market dominance.

For his part, Laurent Freixe, Nestlé CEO believed there were encouraging signs ahead. He said: “We are executing our strategy to accelerate performance and transform for the future. We are accelerating our category growth and improving our market share, through better execution and increased investment, funded through a relentless pursuit of efficiency.

“These actions are already delivering results, with broad-based growth and a robust profit performance in the first half. Where we are investing to accelerate category growth, we are growing four times faster than the Group, and our six innovation ‘big bets’ achieved sales of over CHF 200 million in the first half.

“At the same time, we are addressing our 18 key underperforming business cells, and the aggregate growth gap to market has improved by a third. We are also taking decisive measures to strengthen our business in Greater China and focus our Vitamins, Minerals and Supplements business on winning premium brands,” he noted, stating that the company recognised risks within the market, but that it remained confident that it would attain its medium-term growth ambitions.