VEVEY, Switzerland (TheStreet) -- Nestle (NSRGY) had an admittedly "tough" first half as higher costs and a stronger Swiss franc pressured results and offset price increases, but the world's biggest food company sees growth ahead, particularly in emerging markets.
|Nestle's Kit-Kat bars.|
Volatile costs for ingredients and raw materials represent some of those headwinds, along with "subdued" consumer spending in developed markets and economic instability on a global scale. Passing higher costs for things like sugar, cocoa and coffee onto consumers can only help so much. Nestle raised prices on many of its products in the second quarter, even more so than it had in the first, just as fellow multinationals Kraft Foods (KFT) and Uniliver (UN) did.
"Investing in our business, both organically and through bolt-on buys, and increasing our dividend is our priority," said CFO James Singh, commenting that acquisition opportunities would be considered around the world. Singh's comments, and Nestle's word that it would not initiate a new share- buyback program, stoked rumors that Nestle might consider acquiring Pfizer's (PFE) nutrition business, a unit the pharmaceutical company said in July it was looking to unload.
Nestle's net earnings in the first-half fell 12.7% year over year to 4.7 billion francs ($6.33 billion). Excluding the impact of the divestiture of its Alcon eyecare business, profit was flat. American depositary receipts of Nestle fell 2.3% to $62.42 in morning trading in New York as the major stock indexes tumbled nearly 4% after the Federal Reserve vowed to keep interest rates near zero for at least two more years. --Written by Miriam Marcus Reimer in New York.
>To contact the writer of this article, click here: Miriam Reimer. >To follow the writer on Twitter, go to http://twitter.com/miriamsmarket.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV