Nestlé reported stronger-than-expected organic sales growth for the second quarter on Thursday, as well as announcing plans to raise approximately $3.43 billion through a joint venture with investment firm Platinum Equity, focusing on its waters and premium beverages division.
Nestlé and Platinum Equity will each own 50% of the joint venture, which will be named Peranel, the company announced. Its portfolio will include more than 30 brands sold in 120 countries, such as S.Pellegrino, Source Perrier, and Acqua Panna, as well as the global Nestlé Pure Life brand and other major local water brands.
Nestlé now forecasts full-year organic sales growth of 3% to 4%, revised from the earlier estimate of “around 3%”.
The company has been reshaping its portfolio under CEO Philipp Navratil, who has sought to improve growth and profitability by focusing on the company’s core brands.
In a press release, Navratil commented: “Our RIG-led growth strategy is delivering, with organic growth of 3.7% and RIG of 1.8% in Q2, making steady progress towards our medium-term guidance. Emerging markets growth accelerated, and we delivered solid performance in developed markets. We are increasing and prioritizing our investment behind our leading brands and growth platforms, Sharpening our portfolio focus and driving further efficiencies to reinvest. While the external environment remains uncertain, we are taking actions to accelerate consistent growth.”
Nestle also stated that its underlying trading operating profit margin for the second half of the year is expected to surpass that of the first half, driven by decreased coffee and cocoa costs. However, it also noted that there have been “some higher transportation and energy costs arising from the Middle East conflict.”
Second-quarter organic sales, which exclude the impact of currency movement and acquisitions, rose 3.7% in the second quarter ended June 30, the maker of Maggi stock cubes, KitKat candy bars and Nescafe coffee said. Analysts had on average expected organic sales growth of 3.6%.
By CEO NA Editorial Staff
