Swiss food giant Nestlé has reported consolidated sales of CHF43.47bn (US$34.5bn) for the first half of 2005, an increase of 2.4% over January-June 2004, despite the negative impacts of currencies and divestitures, net of acquisitions.
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Organic growth was 5.2%, the company said, while net profit rose 32.4% to CHF3.7bn.
“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. These results have been achieved despite continuing input cost pressures and difficult trading environments in a number of markets. 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. 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,” said Peter Brabeck-Letmathe, chairman and CEO.
The company said the trading environment had continued to be challenging throughout the first half of the year. Raw and packaging material costs remained volatile, with some reaching recent highs, and consumer demand has remained fragile in some European countries.
Nestlé said its North American businesses had put in excellent performances, especially the Nestlé Prepared Foods, as well as in the recently acquired businesses such as Dreyer’s Grand Ice Cream. Canada and the two key Latin American markets, Brazil and Mexico, delivered strong real internal growth.
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By GlobalDataIn terms of product categories, beverages grew organically 6.4%, milk products, nutrition and ice cream 5.2% and PetCare 5.3%. Prepared dishes and cooking aids was slightly slower at 3.8%, whilst the chocolate, confectionery and biscuits product group did well in general, but is still suffering in Russia.
Looking ahead, Nestlé said trading conditions will continue to be challenging in a number of markets, whilst commodity costs and currencies are likely to remain volatile.
“Despite this difficult environment, the group’s operating efficiency plans, “Operation Excellence 2007” and “FitNes” are on track to deliver their combined gross savings target of CHF1.2bn for the year, necessary to offset the input cost pressures. Nestlé is therefore well placed to achieve its organic growth target and a further margin improvement in constant currencies,” the company said.
