The Switzerland-based company posted 4.1 billion Swiss francs ($4.3 billion, 3.9 billion euros) in profits through the first half of the year, a step backwards compared to $4.5 billion Swiss francs of profits it raked in through the same period in 2015.
Its performance fell below the prediction of analysts polled by the AWP agency, who forecast profits at 4.6 billion Swiss francs.
Outgoing CEO Paul Bulcke linked the less-than-stellar figures to pricing, which he said was at “historically low levels.”
That should recover in the months ahead, allowing the company to meet its full year targets, Bulcke said.
His tenure as chief executive is set to end on December 31st, but he is expected to be a candidate to become the company's next chairman.
His replacement, Ulf Mark Schneider, will join Nestle next month for a transitional period, taking the reins at the start of 2017.
Schneider, the former top executive at Germany-based healthcare company Fresnius, has been tasked with leading the company's pivot towards health and nutrition.
The company that for decades has been most closely associated with coffee and chocolate bars has made clear to investors that it sees enormous growth potential in health and nutrition and intends to lead the market.
Nestle was trading slightly up Thursday (0.96 percent) at 79.10 Swiss francs per share, while Switzerland's main SMI index was up 0.34 percent.
NESTLE
Nestle optimistic despite dip in profits
Nestle, the world's largest food company, on Thursday reported a 9.1 percent fall in profits through the first six months of 2016, but said its sluggish performance should be reversed in a strong second half.
NESTLE
‘Unlimited resources’: Switzerland’s Nestle goes vegan
Swiss food giant Nestle, which has made billions with dairy products, said Monday it will host start-ups that want to develop vegetarian alternatives.
Nestle could thus find itself at the forefront of a sector that has strong growth potential, an analyst commented.
It plans to open its research and development (R&D) centre in Konolfingen, Switzerland to “start-ups, students and scientists” a statement said.
In addition to testing sustainable dairy products, the group plans to encourage work on plant-based dairy alternatives, it added.
Chief executive Mark Schneider was quoted as saying that “innovation in milk products and plant-based dairy alternatives is core to Nestle's portfolio strategy.”
The group unveiled a vegetable-based milk that had already been developed with the process, and technical director Stefan Palzer told AFP it planned to focus on 100-200 such projects a year.
Jon Cox, an analyst at Kepler Cheuvreux, noted that while Nestle had missed some consumer trends in the past, it has now “taken something of a lead in the plant-based alternative market for food”.
And “given its pretty much unlimited resources, Nestle is going to come out one of the winners in the space,” Cox forecast in an e-mail.
Nestle said that “internal, external and mixed teams” would work at the R&D centre over six-month periods.
Nestle would provide “expertise and key equipment such as small to medium-scale production equipment to facilitate the rapid upscaling of products for a test launch in a retail environment,” it added.
The Swiss food giant has long been known for its dairy products, but faced a boycott in the 1970s for allegedly discouraging mothers in developing countries from breastfeeding even though it was cheaper and more nutritious than powdered formula.
On Monday, the group's statement also underscored that the research initiative was part of its commitment to help fight global warming.
“As a company, we have set ambitious climate goals. This is part of our promise to develop products that are good for you and good for the planet,” it said.
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