Nestlé reports H1 results

Nestlé delivers strong sales and earnings per share growthDuring the first six months of 2001, the Nestlé Group continued last year's performance. Consolidated sales growth accelerated to 6.3 per cent, with sales reaching CHF41.2bn (Euro27.141bn). Real internal growth amounted to 4.6 per cent, continuing the positive trend established in the first quarter of the year. Net profit of CHF3.152bn (Euro2.076bn), up 12.7 per cent over the comparable period of last year, represented a record margin of 7.6 per cent (7.2 per cent in H1 2000). Earnings per share increased by 12.1 per cent from CHF7.27 (Euro4.79) to CHF8.15 (Euro5.37). Sales in Asia, Oceania and Africa increased 2.3 per cent to CHF7.688bn (Euro5.604bn). In the Americas and in Europe, sales rose 7.4 per cent to CHF12.29bn (Euro8.096bn) and 1.8 per cent to CHF13.198bn (Euro8.694bn) respectively. Changes in selling prices and other items increased sales by 5.5 per cent. Price adjustments accounted for 2.2 per cent. In addition, nominal net sales benefited from the one time 3.3 per cent positive effect of the trade spend and rebates review, which will not influence the absolute level of profits. Exchange rates had a negative impact of 2.7 per cent, mainly as a result of the strength of the Swiss franc against most currencies, except the US dollar. Divestitures, net of acquisitions, reduced sales by 1.1 per cent. At comparable structure (excluding acquisitions and divestitures) and at constant exchange rates, sales rose by 10.1 per cent. Trading profit rose by 0.4 per cent to CHF4.315bn (Euro2.842bn) in the first half of 2001. Trading profit margin was nearly unchanged before the one-time impact of the trade spend review and the cost of the GLOBE project. The reported results show a trading profit margin of 10.5 per cent. GLOBE, a major Group-wide undertaking aimed at increasing Nestlé's operational efficiency and performance, is likely to have average costs of about CHF250m (Euro164.7m) per year until 2005, and will yield benefits that will reach CHF3bn (Euro1.976bn) by 2006. Marketing expenditures also rose as a result of brand investments as well as the launch of new products. Macroeconomic trends call for some restraint in forecasting results for the second half of 2001. Nevertheless, barring unforeseen events, Nestlé remains confident in its capability to deliver higher sales and profits for 2001 than in 2000 and looks forward to closing the Ralston Purina acquisition before the year end. "Based on the half-year results, with strong top-line and bottom-line growth, I am confident that Nestlé will close 2001 with higher sales and profits than the ones reached in record 2000,"​ said Peter Brabeck, CEO of Nestlé.