FDBusiness.com

Benefiting from deeper penetration in emerging markets of the world, the continued success of its premium products in both developing and developed markets and extra marketing investment, Nestle has increased net profit by 7.5% to SFr5.5b (Eur4.0b) on group sales up by 5.9% to SFr55.3b for the first half of 2010. Organic sales growth was 6.1%, including real internal growth of 4.6%.

The group’s EBIT margin increased by 100 basis points to 15.1%, or by 70 basis points on a like-for-like basis in constant currencies. The ongoing efficiency drive under the Nestle Continuous Excellence programme contributed to the improvement in EBIT margin, even after increased investment in the business to improve long-term performance.

Sales from Nestle’s Food and Beverages business increased by 5.6% to SFr51.0b with organic growth of 5.7% and real internal growth of 4.2%. Food and Beverages’ EBIT was SFr6.7b as the margin improved by 60 basis points to 13.0%, reported and in constant currencies. The higher EBIT margin was achieved while increasing the Food and Beverages consumer-facing marketing spend by over 14% in constant currencies.

Paul Bulcke, chief executive of Nestle.

Within Europe, Nestle exhibited organic sales growth of 2.2% and real internal growth of 1.3% as sales reached SFr10.7b and the EBIT margin rose by 10 basis points to 11.9%. In Western Europe, Nestle managed positive real internal growth in all key markets as it concentrated on increasing distribution, improving customer service and accelerating innovation and renovation. In Southern Europe, positive growth was seen in Italy and the Iberian region and, in Eastern Europe, Poland and the Ukraine were strong performers. In Russia, Nestle experienced good performances in many categories although ice cream and confectionery remained soft.

“The group’s very successful first-half performance is due to the excellent execution of our proven strategies in all parts of the world, covering the full range from premium brands to value-priced offerings, combined with the ongoing successful implementation of Nestle Continuous Excellence,” says Paul Bulcke, chief executive of Nestle.

“We have increased investment in our brands, people and capabilities and have prepared the company for a more challenging second half, which allows me to reconfirm our earlier full-year guidance for Food and Beverages: organic growth of around 5% combined with an increase in EBIT margin in constant currencies.”