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Swiss treats from Re and Nestle

Thursday, February 19, 2015 - 02:29

Nestle tempts investors with a promise of an improved 2015 while Swiss Re talks of a special dividend payment. As Hayley Platt reports, investors are picking apart the announcements to find positive signs in a Swiss economy still reeling from the SNB's decision to abandon its cap on the franc.

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Some disappointment - but sweetened by the promise of better things to come from two of Switzerland's biggest companies, Nestle and Swiss Re. Nestle - maker of KitKat chocolate and Nescafe, reported a rise in full-year sales of 4.5 percent. That falls short of its target band of 5 to 6 per cent - but is in line with expectations. And next year organic sales should be up by around five percent, it says. The food maker's usually able to whether most storms thanks to its wide mix of products - including bottled water and pet food, as well as chocolate. But even it's been hurt by increased competition from the health food sector, slowing demand in Asia and deflation in Europe. While Switzerland's own economy has been a cause for concern too. After the central bank decided to abandon its currency peg, many feared investors would run for the hills. Charles Stanley's Jeremy Batstone-Carr says we shouldn't be too worried just yet. (SOUNDBITE) (English) JEREMY BATSTONE-CARR, CHARLES STANLEY'S CHIEF ECONOMIST, SAYING: "News we've had from Swiss Re and from Nestle and indeed from other companies domiciled in Switzerland suggest that global investors need not be in any tearing hurry to reduce or divest in Switzerland." The world's second largest reinsurer Swiss Re lagged forecasts with its fourth-quarter results. Net profit for the quarter came in at $245 million, against the $361 million seen in a Reuters poll. And 2014 net profit showed a 20% drop. But the company is still giving shareholders a reason to smile. It's decided to increase its cash returns with a special dividend of 4.25 swiss francs and share buyback of up to one billion francs. (SOUNDBITE) (English) JEREMY BATSTONE-CARR, CHARLES STANLEY'S CHIEF ECONOMIST, SAYING: "Be it Switzerland, be it elsewhere in the euro zone, be it the UK, be it Asia or in the United States, that is the one game in town for the time being in a environment of unconventional monetary policy and near zero interest rates." Swiss exports have been finding it tough though. In January they fell 0.8 percent in real terms compared to a year earlier. It's the second consecutive month that exports have fallen. Sales of chemicals and pharmaceuticals, the country's biggest exports were the hardest hit, falling 5.9 percent. Machinery exports dropped 8.4 percent, while watches ticked up by 3.7 percent. One less working day and the currency drop were partly to blame for the fall.

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Swiss treats from Re and Nestle

Thursday, February 19, 2015 - 02:29