Nestlé's growth cancelled out by Swiss Franc hausse

The rising prices of raw materials continue to leave their mark on announcements by major FMCG producers. Of the latest two, Henkel was successful in charging their customers for the higher costs, while Nestlé’s profits plummeted. 

Good Henkel result, but under expectations

Henkel’s organic second-quarter sales rose 6.3% to 3.95 billion euro, raising the year-wide expectation to a 5% rise for 2011. Profits for the German company went up 8% to 514 million euro. The quarterly turnover was slightly lower than analysts had expected, causing CEO Kasper Rorsted to say that “with intense competition continuing, an increase in raw material prices and growing uncertainties in the markets, the economic environment will remain challenging”.

Huge growth cancelled out

Nestlé’s figures on the other hand were hindered severely by the Swiss Franc’s exchange rate (+17% in one year compared to the euro). Net profit went down 13.7% to 4.5 billion euro (-13.7%) as prices for raw materials went up. Nestlé’s organic turnover went down 5% to 39 billion euro, but the Swiss company had its largest turnover growth in years when exchange rates are ignored (+7.5%) thanks to its excellent results in Asia (+13.3%). Paul Bulcke, Nestlé’s Belgian CEO, took heart from this last result and claimed to expect another 5 to 6% growth in the next months.