LONDON (Reuters) -Nestle posted better-than-expected first-half organic sales growth on Thursday as the world’s biggest packaged food company announced a strategic review of its vitamins business that could lead to the divestment of some brands.
The Swiss company maintained its 2025 outlook, saying it still expects organic sales growth to improve and estimates an underlying trading operating profit margin at or above 16%.
Nestle’s results may ease investor pressure on CEO Laurent Freixe, who was appointed a year ago to revive the company’s share price and sales after the business struggled following the pandemic.
The company’s share price has risen around 4% this year but lagged rivals like Unilever and Danone since Freixe’s appointment in August last year.
Nestle, the maker of KitKat chocolate bars, Nespresso coffee and Maggi seasoning recently announced that Chairman Paul Bulcke would step down. Reuters reported the decision followed rising investor unease over the tenure of Freixe’s predecessor and concern about the firm’s corporate governance model.
Organic sales growth, which excludes the impact of currency movements and acquisitions, rose 2.9% in the six months through June, Nestle said, just above analysts’ average forecast of 2.8%.
Total reported sales decreased by 1.8% to 44.2 billion Swiss francs ($55.8 billion), compared to analyst expectations of 44.6 billion francs. Nestle said this included the negative impact of 4.7% from foreign exchange, given the Swiss franc’s significant strengthening.
Freixe said in a statement that Nestle was taking steps to address underperforming business cells and was focussing on winning premium brands in the Vitamins, Minerals and Supplements business.
“We have launched a strategic review of our underperforming mainstream and value brands, including Nature’s Bounty, Osteo Bi-Flex, Puritan’s Pride, and U.S. private label, which may result in the divestment of these brands,” Nestle said.
Nestle’s 2.7% price increases were above the average analyst estimate of 2.5%. Real internal growth – or sales volumes – rose 0.2% versus expectations for a 0.4% increase.
($1 = 0.7923 Swiss francs)
(Reporting by Alexander Marrow)
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