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Nestlé has reported a 10.3% drop in net profit for the first half of the year, falling to 5.1 billion Swiss francs ($6.4 billion), as the company struggles to boost sales amid sluggish consumer spending in China. The Swiss food giant, whose brands include Nespresso, KitKat, Purina, and Maggi, is working to turn around its fortunes.
Sales, however, only dipped by 1.8 percent to 44.2 billion francs, which was due in large part to passing on higher cocoa and coffee prices to consumers, although faced even greater headwinds from the strong Swiss currency.
"We are also taking decisive measures to strengthen our business in Greater China," said chief executive Laurent Freixe.
The company said China, which has suffered sluggish domestic consumption amid a deflationary price environment, had a 0.7 percentage point impact on organic growth in the second quarter.
Overall, the company reported 2.9 percent quarterly organic growth, which strips out currency effects and other elements to measure performance.
Nestle warned China would continue to weigh on growth as it invested to turn around its performance. Nestle's shares fell 3.5 percent in a Swiss market that was flat overall, as the sales figures missed the analyst consensus calculated by Swiss financial news agency AWP. Net profit came in slightly higher than expected.
Nestle made a surprise switch of its chief executive last year amid soft spending by consumers for food and household goods. Nestle's share price slumped by nearly a quarter last year, raising concerns in Switzerland, where pension funds invest heavily in the company. The company launched a number of measures to boost its product offering and cut costs. That was reflected in better organic growth in the second quarter compared to the same period last year, and Nestle said that it was expected to continue for the rest of the year.
Nestle said it was maintaining its 2025 guidance "despite factoring in increased headwinds".
