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Nestlé CEO announces US strategic move

Nestle InternationalNestlé have recently announced their plans to explore a strategic move for its US confectionery business.

“We are pleased with our value creation progress in the first half of 2017. This includes solid operational improvements as well as portfolio management choices and our decision to increase balance sheet efficiency,” said Mark Schneider, the Nestlé CEO.

The Nestlé board of directors and their team have initiated a comprehensive review of the company’s capital structure and priorities to support and enhance its ability to deliver on its value creation model.

“Organic growth in the first half did not fully meet our expectations. While volume growth remains at the high end of our industry, pricing continues to be soft. Asia and Africa confirmed their positive growth momentum. Western Europe experienced a volume decline, which we consider largely transitory. North America and Latin America saw a slight improvement in organic growth, mainly driven by volume. Our coffee, water and petcare businesses confirmed their growth potential with solid first-half results,” commented Schneider.

The Swiss food giant has reported its first-half earnings which has increased by 19 per cent due to a one-time tax expense that affected profit a year earlier, while sales slipped as a result of divestments and currency issues, according to AAP.

“Profitability is in line with our expectations, as restructuring savings and efficiencies have offset higher commodity costs. We are accelerating our margin improvement initiatives. We confirm our 2017 guidance with organic growth likely to be in the lower half of the 2 to 4 per cent range. Our 2020 mid-range expectations for organic growth remain unchanged,” said Schneider from the company statement.

According to AAP, the company behind Maggi and KitKat last Thursday reported a net profit of 4.9 billion francs ($A6.4 billion) for the first half of the year. The total sales have declined from 0.3 per cent at 43 billion francs.

Nestle, which does not break down earnings by quarter, has confirmed its full-year outlook for organic growth “in the lower half of the 2-4 per cent range”. It expects higher underlying earnings per share in constant currency.

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