Nestle profit down in first half of year

by Staff
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VEVEY, SWITZERLAND — Profit at Nestle S.A. fell 14% in the first half of fiscal 2011, as volatile markets, rising commodity costs and the strength of the Swiss franc weighed on results. Nestle posted a profit of 4,703 million Swiss francs ($6,480 million) during the first half, down from 5,450 million Swiss francs during the same period of the previous year.

Sales also were lower, falling 13% to 41,004 million Swiss francs ($56,573 million) from 47,089 million Swiss francs during the same period of the previous year. However, Nestle said sales grew 7.5% during the first six months in constant currencies and excluding the impact of its sale of Alcon.

“Nestle continued to make good progress in a period characterized by political and economic instability, natural disasters, rising raw material prices and, yes, a strong Swiss franc,” said Paul Bulcke, chief executive officer. “This has made for an extremely tough, volatile and competitive environment. But by leveraging our competitive advantages, investing behind our growth drivers and excelling in operational efficiency and effectiveness, we managed to drive growth not only in emerging markets but also in developed countries, especially in Europe. Furthermore, we improved our trading operating margin while increasing investment in our brands. For the full year, we expect organic growth at the top end of the 5% to 5% range, combined with a margin increase in constant currencies.”

In Zone Americas, the company said it had sales of 12.8 billion Swiss francs, which resulted in 5.6% organic growth and 1.1% real internal growth.

“In North America, where consumer confidence is subdued, we continued to grow our business,” Nestle said. “The frozen business saw gains in pizza, in the U.S. for DiGiorno and in Canada for Delissio. Stouffer’s also gained market share, and Lean Cuisine picked up momentum in recent months through launches such as Market Creations and by increasing its presence in snacking.

“Necessary pricing in ice cream impacted volumes for Dreyer’s, although Haagen Dazs proved more resilient and Nestle Drumstick continued to grow well. Skinny Cow was launched into the chocolate category.”

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