Nestlé delivers strong first-half figures

Nestlé's half-year figures have made the company confident for 2005 Keystone

The Nestlé food giant has reported that its first-half net profit jumped by 32 per cent over last year's figure to SFr3.68 billion ($2.93 billion).

Sales at the company, which is based in Vevey, western Switzerland, climbed by 2.4 per cent to reach SFr43.5 billion, despite a negative currency impact and divestitures.

The figures were above those forecast by market analysts and were helped by faster sales growth in the United States and Asia.

“Nestlé has positioned itself well in high-growth markets,” said Jane Coffey, head of equities at Royal London Asset Management in London, which manages $11 billion of the stock.

“Compared with other players like Unilever, it’s better,” she added.

“Nestlé’s results for the first half of 2005 are in line with our forecasts and underscore the Nestlé model of combining a good level of organic growth with a sustainable improvement in operating performance,” commented chairman and chief executive Peter Brabeck.

He said that the results had been achieved despite continuing cost pressures and difficult trading environments in a number of markets.

Brand strength

“As such, they demonstrate the strength and depth of Nestlé’s brand portfolio around the world, as well as the effectiveness of our long-term strategy,” he added.

Nestlé’s brands range from KitKat wafers and Smarties sweets to Nescafé coffee, Perrier mineral water and Friskies pet food.

The company recorded organic growth of 5.2 per cent, which was within Nestlé’s long-term trend target of five to six per cent, and comprised 3.4 per cent real internal growth and 1.8 per cent pricing.

It said consumer demand had remained “fragile” in some European countries but there were “excellent performances” across North America.

Nestlé said that despite the difficult environment, the group’s operating efficiency plans were on track to deliver the combined gross savings target of SFr1.2 billion for the year, needed to offset cost pressures.

Well placed

As a result, Nestlé was “well placed” to achieve its targets for underlying sales growth at five to six per cent and an improvement in its margin on earnings before interest, tax and amortisation at constant currencies.

“The first-half results allow us to be confident in achieving our organic growth target in 2005 as well as improving our margins in constant currencies,” Brabeck said.

Shares in Nestlé have risen by around 20 per cent this year and stood at SFr358 at the end of Tuesday trading.

swissinfo with agencies

Key facts

Nestlé half-year figures:
Total sales – SFr43.474 billion (+2.4 per cent)
Operating profit (Ebita) – SFr5.212 billion
Net profit – SFr3.683 billion
Real internal growth – up 3.4%.

In brief

Nestlé was founded in 1866 by Henri Nestlé and is today the world’s biggest food and beverage company

Sales at the end of 2004 were SFr87 billion, with a net profit of SFr6.7 billion.

The company employs around 247,000 people and has factories or operations in almost every country in the world.