Nestle first-half profits climb 32%
August 17, 2005
by Eric Schroeder
VEVEY, SWITZERLAND — Nestle S.A., the world’s largest food and drink company, on Wednesday said first-half profit soared 32% due to new accounting rules that took effect earlier this year. Nestle posted first-half profits of 3.68 billion Swiss francs ($2.93 billion), up from 2.78 billion francs in the first half of last year.
The rise in profit, which beat analysts’ expectations, reflected adjustments in 2004 figures for regular goodwill amortization, which was abolished with the introduction of international financial reporting standards for 2005 earnings reports.
Nestle’s operating profit, which was not subject to the accounting changes, rose 3.4% to 5.21 billion francs ($4.15 billion), the company said.
"Nestle’s results for the first half of 2005 are in line with our forecasts and underscore the Nestle model of combining a good level of organic growth with a sustainable improvement in operating performance," said Peter Brabeck, chairman and chief executive officer.
Sales rose to 43.47 billion francs ($34.66 billion) from 42.45 billion francs in the first six months last year on strong growth in North America, which compensated for weaker consumer demand in Europe, Nestle said.
"These results have been achieved despite continuing input cost pressures and difficult trading environments in a number of markets," Mr. Brabeck said. "As such, they demonstrate the strength and depth of Nestle’s brand portfolio around the world."
Nestle Waters achieved organic growth of 5.9%, as the North American business continued its recent trend of strong growth.
The company, which makes a variety of food products ranging from Nescafe coffee to Perrier water and Friskies cat food, reports earnings only for the half year and full year and not individual quarters.