Nestle H1 net profit lower but margin up, skips growth target

Nestle S.A. Wednesday (August 12) said its first-half operating margin improved despite a decline in net profit and sales, but didn't repeat a previous growth target for the full year.

Net profit fell to CHF 5.1 billion (Swiss francs) or US$4.7 billion from CHF5.2 billion a year ago, beating market expectations of CHF4.84 billion. Sales slipped to CHF52.3 billion from CHF53.1 billion, undershooting analyst expectations of CHF52.8 billion.

Organic growth, a closely-followed performance measure, stood at 3.5 percent.

The operating profit margin increased to 14.1 percent from 13.8 percent.

Nestle, the world's largest food and beverages producer by sales, said it expects volume-driven organic growth to accelerate in the second half, but didn't reaffirm a previous guidance of the organic growth rate "at least approaching 5 percent". It continues to aim to improve the operating profit margin in constant currencies.

Nestle shares closed at CHF44.10 Tuesday. They have gained 6 percent on the year so far.

US$1 = CHF1.08 (August 12)