Nestle the Swiss based global food manufacturer today reported a drop in profits by two per cent despite an efficiency programme. A net profit of 5.1 billion Swiss francs was achieved in the first half of 2009, down from a net profit of 5.2bn francs in the first half of 2008.
CIO 100 ranked Nestle blamed its local currency the Swiss franc for the drop in profits. Switzerland's franc has not been battered by the credit crunch with the severity that has lowered the value of the pound and US dollar.
The company, which makes a wide range of confectionary, coffee, milk products and bottled water said it had achieved organic growth of 3.5 per cent. The food and beverages division achieved growth of 3.4 per cent at a time when analysts are saying that branded goods such as Nestle are losing sales to shop own brand goods as consumers tighten their belts.
"The success of our efficiency initiatives enabled increased investment in consumer-facing marketing and R&D, which leads me to expect an acceleration in organic growth in the second half of 2009," said Paul Bulcke, Nestle chief executive officer.
The Nestle Continues Excellence Programme is a group wide efficiency programme that the food maker said "contributed to a 30 basis points decline in both the cost of goods sold and distribution costs". Nestle said its operating cash flow was "significantly up"; 6.3 billion, compared to 3.5bn for the same period in 2008.
The European part of Nestle powered ahead with the Excellence Programme, which the company said "compensated" for the downturn in this market. Great Britain, along with Eastern Europe were the highest growth areas in Europe for the Nestle business. In the US Nestle said the efficiency drive had achieved significant savings, but did not reveal a figure.
Nestle has been a major user of SAP since 2003 as rivals such as Unilever and Premier Foods move onto SAP at present in a move to achieve savings. Troubled communications and networks provider Nortel is also a major supplier.