Nestle net falls 2.7% in first half

by Eric Schroeder
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VEVEY, SWITZERLAND — First-half net profit at Nestle S.A. fell 2.7% to 5,071 million Swiss francs ($4,708 million), down from 5,214 million Swiss francs in the first half of 2008. Sales for the first half were 52,267 million Swiss francs ($48,537 million), down 2% from 53,066 million Swiss francs.

EBIT in the first half was 7,383 million Swiss francs ($6,854 million), up from 7,341 million Swiss francs in the first half of 2008.

During the first half Nestle posted organic growth of 3.5%, including 0.5% in real internal growth.

"Nestle delivered a combination of growth and increased profitability in the first half of the year, and this in a very challenging business environment," said Paul Bulcke, chief executive officer. "The success of our efficiency initiatives enabled increased investment in consumer-facing marketing and R.&D., which leads me to expect an acceleration in organic growth in the second half of 2009."

First-half EBIT in the company’s Food and Beverages segment totaled 6,013 million Swiss francs ($5,586 million), down narrowly from 6,077 million Swiss francs in the same period a year ago. Net sales were 48,313 million Swiss francs ($44,846 million), down from 49,323 million Swiss francs.

For Zone Americas, EBIT in the first half rose 7% to 2,307 million Swiss francs ($2,143 million) on a 6% increase in sales to 15,197 million Swiss francs ($14,117 million).

"The EBIT margin improved by 20 basis points due to growth and significant cost savings from the Nestle Continuous Excellence Programme," Nestle said. "Both North and Latin America experienced strong organic growth, particularly the U.S., Brazil and Mexico. Soluble coffee and beverages, frozen food and pet care did particularly well."

An area of Nestle’s business that did not perform up to expectations in the first half was Nestle Waters. EBIT in the first half was up narrowly to 392 million Swiss francs ($364 million), but sales fell 5% to 4,723 million Swiss francs ($4,388 million) from 4,954 million Swiss francs. The company pointed to lower demand in Western Europe and North America as reasons for the decline in sales.

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