Nestlé beats milk rise to boost profits

21 August 2007
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22 August 2007 | Gareth Mytton

Food giant Nestlé overcame rising input costs to post an 18.4 per cent increase in net profit in the first half of 2007.

It rose to £2.1 billion in January-June this year, a £300 million increase in net profit on the same period in 2006.

Peter Brabeck-Letmathe, chairman and chief executive, said: "In spite of increasing cost pressures, I am confident of Nestlé achieving above-target organic growth for 2007, as well as a sustainable margin improvement."

In the Americas, Nestlé raised its prices in the categories most affected by input costs - especially dairy products - to improve margins, but it warned that milk prices would increase further in the second half of the year. The outlook for Asia, Africa and Oceania was similar.

The first-half results were helped by the company's price increases in the face of anticipated higher input costs, it said. A spokesman for Nestlé explained it had hedged "aggressively" on cocoa and coffee supplies.

A number of contracts would also be renegotiated in the second half of 2007, the spokesman added.

SMaug2007

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