7 Nov 2016

Maggi Noodles, Firstsource Solutions, Brexit

We had two second quarter results of interest. Nestle reported sales ahead by 35.1% and profits by 81.1%. The profits are not really comparable as the company continues to recover from the Maggi Noodles additive controversy. The power of a global brand is underlined however by the success of the company’s aggressive marketing response. Maggi Noodles have already regained a 60% market share as it heads back to its former 80% level. It is also notable that the response includes focusing on premium product launches which are good for margin improvement. Firstsource Solutions reported 14% growth in revenues in constant currency terms but the outlook is clouded a bit because its largest client is billed in sterling and thus exposed to Brexit-driven currency volatility. Profits were 21.5% and the company announced a ten-year extension to its contract with one of its largest healthcare clients in the US, worth $40mil.

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