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Nestle Group plans to buy back CHF8 billion shares

By: Fred Yaw Sarpong (Daily Express)

The Chief Executive Officer of Nestle, Paul Bulcke has announced that his outfit is planning to buy back CHF8 billion shares in a programme, which will start this year and continue into 2015.

According to Mr. Bulcke, this is to provide additional competitive returns for their shareholders. He stated that the performance in the first half of this year, allows them to confirm their outlook for the full year.

Mr. Bulcke announced this in the company’s financial statement for the first half 2014. He added that “We delivered solid, broad-based organic growth, driven by real internal growth and pricing in what is still a very volatile trading environment. We continued to drive the growth momentum with innovation, increased support behind our brands, and a focus on efficiencies.”

He said the creation of Nestlé Skin Health with the Galderma business expanded their nutrition, health and wellness strategy, reinforcing their long-term strategic ambition to improve people’s lives through science-driven innovation.

During the first half of 2014, the Nestle group delivered organic growth of 4.7%, composed of 2.9% real internal growth and 1.8% pricing. The report stated that the total sales were CHF43 billion.

“The strong Swiss Franc continued to have a substantial negative impact (-8.8%) and after divestitures, net of acquisitions (-0.7%), reported total sales were down by 4.8%,” said the company..

The Group’s trading operating profit for the period was CHF6.4 billion. The reported trading operating profit margin was 15.0%, while the cost of goods sold increased by 20 basis points, reflecting input cost pressures, especially in dairy.

Nestle group total marketing and administrative costs decreased by 30 basis points, reflecting efficiencies. At the same time they continued to strengthen the support for their brands, increasing consumer facing marketing spend in constant currencies.

The company’s net profit was down to CHF4.6 billion, while reported earnings per share were CHF 1.45. The company said both impacted by the strong Swiss Fran. However, the underlying earnings per share in constant currencies were up 3.6%.

“Operating cash flow was CHF4.3 billion. Working capital remains an area of focus and we have continued to lower it as a percentage of sales,” said Mr. Bulcke.

The organic growth of the Nestlé Group was broad-based; 4.9% in the Americas, 1.4% in Europe, and 7.5% in Asia, Oceania and Africa. Globally, the company businesses in developed markets grew by 0.6%, while emerging markets grew at 9.7%.

Meanwhile, the real internal growth was 2.4% in the Americas, 2.3% in Europe and 4.2% in Asia, Oceania and Africa.


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