Nestle's H1 profit down 2.5% as Maggi recall in India hurts

Swiss FMCG major Nestle today reported 2.5 per cent decline in its consolidated net profit at 4.51 billion Swiss Franc for the first half of 2015 as Maggi noodles ban in India impacted its bottomline.
The negative impact of the Maggi withdrawal will continue in the second half of the year in the Indian market, the company said, adding its sales in Asia, Oceania and sub-Saharan Africa (AOA) markets were "overshadowed" by the issue in India.
Nestle said its consolidated sales were also down marginally at 42.84 billion Swiss Franc in the first half of the year as against 42.98 billion Swiss Franc in the year-ago period.

Commenting on the results, Nestle CEO Paul Bulcke said: "The first half results were in line with our expectations, broad-based across categories and geographies, solid even in difficult circumstances, and consistent with our strong performance over time."
"In India, our withdrawal of Maggi noodles resulted in a negative organic growth, which will continue into the second half. We are engaging fully with the authorities as we work to relaunch the product," the company said in a statement.
The company further said: "The trading operating profit margin of zone AOA was affected by the withdrawal and destruction costs of the returned products in India, which have already had a material impact in the first half of the year".

Nestle said in 2015, it is aiming "to achieve organic growth of around 5 per cent with improvements in margins and underlying earnings per share in constant currencies, and capital efficiency".

"The trading operating profit margin of zone AOA was affected by the withdrawal and destruction costs of the returned products in India which have already had a material impact in the first half of the year," said Nestle.
In June, India's central food safety regulator FSSAI had banned the Maggi instant noodles, saying it was "unsafe and hazardous" for consumption after finding lead levels beyond permissible limits.
The regulator had also said the company violated labeling regulations on taste enhancer MSG and ordered the company to submit a compliance report on its orders.

The ban was, however, overturned by the Bombay High Court today.
This week, the government filed a class action suit against Nestle India seeking about Rs 640 crore in damages for alleged unfair trade practices, false labeling and misleading advertisements.
Following orders from India'a food safety regulator FSSAI, Nestle India had to recall its entire stock of instant noodles sold under Maggi brand.
Ban of Maggi hit Nestle India hard as it reported a standalone loss of Rs 64.40 crore for the quarter ended on June 30, 2015 - its first quarterly loss in over three decades.