Swiss food and drinks giant Nestle SA posted a 3.7 per cent rise today in its first-half profits despite what it described as the challenges of slowing markets around the world and "value-conscious" consumers.
But the food and drink company by revenue said it still expects underlying sales growth of around 5 per cent for the remainder of the year even as it contends with cash-strapped consumers, both in Europe and emerging markets.
Nestle today reported that it had first-half profits of USD 5.5 billion in the January-June period.
Nestle expects first-half growth momentum to continue in the second half, making for around 5 per cent underlying sales growth. That would be an improvement from its so-called organic growth of 4.1 per cent for the first six months of the year, which has fallen from 6.6 per cent the year before.
"It's not going to be easy. It's going to be a stretch," Chief Financial Officer Wan Ling Martello told a webcast teleconference with investors and journalists.
Nestle's prices have been adjusted downward in many countries to make its products more attractive for cash-strapped consumers, she said.
Prices are set by local managers, not by global headquarters in Switzerland, she added, describing the process as the company "doing the right thing for our consumers, and therefore doing the right thing for our business."
Investors were less sure the company would hit its sales and profits targets for the year, sending shares down by 2.1 per cent in morning trading on the Zurich stock exchange.
Chief Executive Paul Bulcke said the first half shows "a balanced performance, both top and bottom line, in an environment of lower growth and lower input costs."
The underlying sales growth, he said, was "somewhat muted, reflecting lower pricing by our markets, as we leveraged softer input costs to meet the expectations of today's more value-conscious consumers."
Based in Vevey, Switzerland, Nestle is the maker of dozens of household name brands such as Nescafe, Haagen Dazs, Jenny Craig and KitKat. It also is a major buyer of food commodities, and its results can serve as an indicator of the entire food industry, worldwide consumer demand and health of the global economy.
