Nestlé makes $5-billion half-year profit

GENEVA (AP) – Swiss food and drinks company Nestlé SA reported Wednesday a 7.5 percent rise in half-year net profit to 5.45 billion Swiss francs ($5 billion) and raised its full-year outlook as global sales increased despite adverse currency exchange rates.

The results from the maker of Nescafé, Jenny Craig and Haagen-Dazs beat analyst expectations and compared with a 5.1 billion francs profit a year earlier. Sales rose to 55 billion francs during the six month period to June from 52 billion francs.

Nestlé now expects its core food and drinks business excluding currencies effects and one-off events to grow 5 percent, an improvement on its previous forecast of over 3.9 percent.

Shares in Nestlé closed 0.2 percent lower at 51.40 francs ($48.49) on the Zurich exchange.

"We have increased investment in our brands, people and capabilities and have prepared the company for a more challenging second half,'' said chief executive Paul Bulcke.

Nestlé said the biggest growth came from emerging markets, the sale of low-cost alternatives and a strong performance by its premium brands.

Developed markets showed some weaknesses, with lower demand for frozen food in North America and a late start to the ice cream season in Europe.

Exchange rates also put a drag on sales as the Swiss franc surged against the euro during the first half. Nestlé, which earns most of its money outside Switzerland, said these adverse currency effects reduced sales in Swiss francs by 1.5 percent.

The Vevey-based company benefited from several acquisitions including the purchase of rival Kraft's frozen pizza business.

Investors have been looking for signs that Nestlé is poised for a major takeover, but the company has been coy about spending further cash in recent months. Instead, Nestlé has made several smaller investments into companies such as Guatemala's Malher Group and Vitaflo, a British maker of clinical nutritional products.

Source: MB