The frozen ready meals market in North America was a bright spot for Nestlé SA during the first half of 2016, a period in which net profit declined by 0.4 billion Swiss francs to 4.176 billion (approximately US $4.374 billion) compared to the year before. The 12% slide was attributed to a one-off, non-cash adjustment to deferred taxes. Overall sales of 43.2 billion francs generated by the Vevey, Switzerland headquartered multinational consumer goods company reflected organic growth of 3.5% and real internal growth of 2.8%.
“The first half of 2016 was in line with our expectation with growth almost entirely driven by volume and product mix, yielding further market share gains,” said CEO Paul Bulcke. “While we continued to address challenges in China, we enjoyed good performances across the US, Europe, Southeast Asia and Latin America, and expect this to continue in the second half. We also expect pricing, which reached historically low levels in the first half, to recover somewhat in the coming months.”
The successful growth of the company’s frozen meals business in the United States continued, supported by innovations and marketing investment, particularly for Lean Cuisine and Stouffer’s brands.
During an earnings call with investors on August 18, CFO Francois-Xavier Roger commented: “As you know, we renovated our entire frozen food franchise in the US and the Marketplace [Lean Cuisine] line, which is really addressing the need for organic, higher protein, lower salt, lower sugar, and gluten-free, is growing very fast – 19% of organic growth in the first part of the year.”
Addressing the overall global market, Roger spoke about the impact of soft prices during the past six months.
“As anticipated, the pricing environment remains challenging. We had deflation in developed markets and low commodity pricing overall,” he said. “We expect stronger pricing in the second half of the year, though. We have started to take selective price increases in some categories and geographies.”
Roger also touched on the fallout, or seemingly lack thereof thus far, of the recent Brexit referendum in which a majority of British citizens who cast ballots opted to leave the European Union.
“We don’t see any direct impact in the short term, apart from the fact that obviously the translation of our UK business into our group accounts has reduced a little bit because the currency has devalued by close to 15% against the Swiss franc,” he said.
