Swiss food giant Nestlé has had a smaller profit in 2013 than it did in 2012, despite an increased turnover. The turnover growth was the smallest in four years though, a feat CEO Bulcke wishes to avoid in the future with an increased focus on medical care.
Europa weakest of the bunch
If purchases and exchange rate fluctuations are taken out of account, turnover reached 92.2 billion Swiss francs (75 billion euro), a 4.6 % increase, with net profit at 10 billion Swiss francs (some 8 billion euro). That is a “down slightly due to the costs of portfolio restructuring and the currency impact”, according to the company.
The increased price pressure in Europe is partly to blame, according to CEO Paul Bulcke, as sales remained pretty flat there, with only a 0.8 % increase. That makes Europe the least achieving region for Nestlé, even though demand also slowed down in the emerging countries. Nevertheless, these countries make up 44 % of total turnover and picked up the pace in the last quarter of 2013 with a 9.3 % increase, while the previous 3 quarters reached an 8.8 % increase. To compare: the Americas ‘only’ grew 5.3 % in 2013.
Every branch within Nestlé managed to create turnover growth, with mainly nutritional and beauty products on the rise (+ 7.6 %), while water saw the smallest growth (+ 2 %). “Last year was challenging and 2014 will likely be the same”, Bulcke said. The Belgian aims for a 5 % growth “outperforming the market” and with “improvements in margins”, but the results will mostly come in “the second half” of 2014.
Focus on medical care
Nestlé had already sold 8 % of its stock in French cosmetics firm L’Oréal earlier this week, a transaction worth 6 billion euro, even though the Swiss will get 3.4 billion euro in cash and full control over their (former) joint venture Galderma. The manufacturer of skin care products was founded in 1981 by L’Oréal and Nestlé, currently has 5,000 employees and a 2012 turnover of 1.59 billion.
The acquisition is another step towards a more medical future for the world’s largest food producer (with brands like KitKat, Maggi and Nescafé): Nestlé will even have its very own specialized medical skin treatment division, called Nestlé Skin Health.