Nestle reports Fall in Earnings
Thursday, February 15, 2018 – 09:33 AM
Swiss food and beverage giant Nestle has stated that it’s ending its agreement with the well-heeled Bettencourt family of France over the L’Oreal cosmetics empire and is exploring alternatives for its Gerber Life Insurance company.
The announcement came as the Vevey, Switzerland-based company reported net profit dropped nearly 16% to 7.18 billion Swiss francs ($6.2bn) annually, compared to 8.53 billion in 2016. The company said the drop was mostly because of accounting of cash-flow problems at Nestle Skin Health.
Nestle said earnings edged up 0.4 percentage to 89.8 billion francs, while inherent profit rose 4.6% to 3.55 billion francs.
The company reported growth of 2.4%, also CEO Mark Schneider admitted that organic sales growth came in “below our expectations” after “weak earnings development” toward twentieth.
Schneider stated Nestle’s markets in North America and Brazil faced a “challenging environment” while earnings growth was “encouraging” in Europe and Asia.
The company said it anticipates lower tax expenses in the United States of roughly 300 million francs as a consequence of their US tax reform package.
Nestle said it may consider “strategic options” including a potential purchase of Gerber Life obtained from Novartis 11 decades before, but “remains fully committed to keep and develop the Gerber baby food industry, which will be an integral component of our infant nutrition growth stage.”
It stated its shareholding in L’Oreal has been an “significant investment” and expressed confidence from the French cosmetics firm’s management. Nestle said it wouldn’t revive a shareholding agreement with the Bettencourt family, another top shareholder, that is set to expire next month — though it said it didn’t wish to boost its stake in L’Oreal.
Nestle said the main details of the deal with the Bettencourt family held that neither side may increase their bets in L’Oreal during the life of Liliane Bettencourt and a couple months after that. She expired in September.