Nestle's sales slip amid Maggi noodle recall and currency woes

Group's results took a hit of 66 million Swiss francs as a result of Maggi recall in India
8/13/2015

Food and drinks giant Nestle says sales and net profit declined slightly in the first half due to currency fluctuations and a recall of Maggi noodles in India.

The Swiss company behind Nescafe, Stouffer's, Haagen Dazs and Perrier said Thursday that sales drifted to 42.843 billion Swiss francs (39.3 billion euro) from 42.981 billion a year earlier. Net profit fell 2.5 per cent to 4.517 billion francs.

In a statement, CEO Paul Bulcke called the first-half results "solid even in difficult circumstances'' and said Nestle S.A. was confirming its outlook for growth in the full year.

Revenues were dented by appreciation of the Swiss currency and the withdrawal of Maggi noodles in India earlier this year after government tests found lead above legal levels. The Indian government is seeking damages from Nestle India, accusing it of unfair trade practices and false labeling, an official said Wednesday.

"In India, our withdrawal of Maggi noodles resulted in negative organic growth which will continue into the second half,'' the company statement said. "We are engaging fully with the authorities as we work to re-launch the product.''

In a conference call, CFO Francois-Xavier Roger said the group's results took a hit of 66 million Swiss francs during the first half because of the Maggi recall. He also pointed to "difficult'' circumstances in China amid slowing economic growth.

Like many food companies, Nestle has faced a slump in frozen food sales because of a move toward food that people feel are fresh or natural. Although frozen vegetables are often touted as being just as wholesome as their fresh counterparts, frozen meals and snacks are widely seen as being full of sodium and preservatives.

Nestle noted "promising'' early signs after a re-launch of frozen meals brands with new Lean Cuisine Market Place and Stouffer's Fit Kitchen ranges.

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