Nutrition hold Nestlé and Danone steady after flatter than expected half-year results

By Nathan Gray contact

- Last updated on GMT

Nestlé and Danone results balanced by nutrition
Specialised nutrition and health divisions have helped to balance global food giants Nestlé and Danone after each reported a slowdown in sales across core areas of business as the impact of acquisitions, divestment's and ‘currency headwinds’ took hold.

Danone reported flat sales in the second quarter roughly in line with expectations, but was pulled down by the performance of core dairy and plant-based divisions. However, the firm reported a rise in profit for the first half, with strong growth in baby food and medical nutrition offsetting the poor performances in its core dairy business.

Meanwhile the world’s biggest food company, Nestlé, reported organic sales growth of just 2.3% in the six months to June – falling short of market expectations, with growth of 2.7% forecast by analysts.

 “Organic growth in the first half did not fully meet our expectations,”​ commented new Nestlé CEO Mark Schneider, who took on the role earlier this year.

He added that as restructuring savings and efficiencies have offset higher commodity costs, profitability was in line with expectations.

“We are accelerating our margin improvement initiatives,”​ he said – noting that the company confirms its full year guidance, “with organic growth likely to be in the lower half of the 2-4% range.”

Danone: Specialised Nutrition growth

French giant Danone reported first-half operating profit growth of 7.3% to €1.72bn on a like-for-like basis. The maker of Actimel and Activia said net profit €977m euros from €880m. 

However, the group only saw growth in its Specialised Nutrition (+5.4%) and Waters (+0.8%) units – with declines seen in International Dairy (-2%) and North America Dairy (-2.9%) units.

“As expected, the slow start of the year is the result of specific emerging markets’ headwinds and challenges in Europe and in North America, balanced with significant successes in developing sustainable platforms in Specialized Nutrition in China,”​ said CEO Emmanuel Faber – who added that momentum was strong in Danone’s Medical Nutrition business and with former WhiteWave brands like Alpro, Vega, and International Delight.

Danone said it expects growth to accelerate in the second half of the year, as it confirmed full year 2017 goals.

Nestlé: Europe takes a hit

Swiss-based Nestlé saw half-year sales down 0.3% to 43bn Swiss Francs (CHF) as European sales declined by CHF 1bn.

Despite poor sales in Europe, the firm did report organic growth of 2.3% across its businesses in the first half of the year, though growth was below market expectations of 2.7%.

Sales were led by the company’s water, coffee and pet care businesses. Meanwhile, confectionery was the only category with negative growth.

Nestlé Nutrition held steady, reporting 0.9% organic growth as sales remained at CHF 5.2bn, while Nestlé Health Science maintained mid single-digit organic growth “with good growth in medical nutrition but a subdued performance in consumer care in the US.”

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