Nestlé S.A., a Swiss multinational food and beverage company headquartered in Vevey, Switzerland, disclosed that in the first half of 2015, its organic growth was 4.5%, composed of 1.7% real internal growth and 2.8% pricing. Total sales of CHF 42.8 billion were impacted by foreign exchange (-5.8%). Acquisitions, net of divestitures, contributed 1% to sales. The growth was broad-based across categories and geographies, the company said in a statement. Organic growth in the developed markets accelerated to 2.2% while in the emerging markets we achieved strong organic growth of 7.3%. Organic growth was 6.6% in the Americas (AMS), 3.4% in Europe, Middle East and North Africa (EMENA) and 2.2% in Asia, Oceania and sub-Saharan Africa (AOA). Real internal growth was 1.7% in AMS, 2.4% in EMENA and 0.6% in AOA. The continuous efforts to drive cost efficiencies, and the consolidation of Nestlé Skin Health, led to a 160 basis points drop in the cost of goods sold. The effect from input costs was neutral. Cost reductions were partly reinvested in increased consumer facing marketing support. The trading operating profit margin rose by 20 basis points in constant currencies. Trading operating profit was CHF 6.4 billion with a margin of 15.0%. Net profit was CHF 4.5 billion and reported earnings per share were CHF 1.43. Underlying earnings per share rose 7.3% in constant currencies. The group's operating cash flow was CHF 3.9 billion reflecting the appreciation of the Swiss Franc, lower dividend income from L'Oréal due to our reduced shareholding and the timing of tax payments. The Middle East and North Africa region delivered solid growth with soluble coffee and confectionery the highlights. Turkey had strong growth and there were solid performances across the Middle East, compensating for the challenges in Iraq and Yemen. Paul Bulcke, Nestlé CEO, said: “The first half results were in line with our expectations, broad-based across categories and geographies, solid even in difficult circumstances, and consistent with our strong performance over time. They reflect the relevance and strength of our Nutrition, Health and Wellness strategy and our discipline in execution. Our investments in the new growth platforms Nestlé Health Science and Nestlé Skin Health are delivering and complement the good momentum in our food and beverages businesses. This allows us to confirm the outlook for the full year.” Nestle Water recorded sales of CHF 3.8 billion, 5.3% organic growth, 5.6% real internal growth; 11.5% trading operating profit margin, +110 basis points. Nestlé Nutrition registered sales of CHF 5.3 billion, 3.9% organic growth, 1.3% real internal growth; 23.0% trading operating profit margin, +140 basis points. Nestlé Professional is regaining growth momentum, with good acceleration in the strategic growth platforms of culinary flavors and beverage solutions. Emerging markets were the main drivers, particularly Latin America, Eastern Europe, Indonesia, Turkey, and Indochina and there was good growth in our culinary business in North America, compensating for the poor trading environment in Western Europe. Nespresso continued to grow globally, capitalizing on the significant development of the portioned coffee segment. It further expanded its Grands Crus range, opened 20 new boutiques around the world, launched a Nespresso Café in Vienna and continued the roll-out of the Nespresso Cube, an automated retail outlet. Also the VertuoLine system in North America performed well. Nestlé Health Science delivered good growth across all regions and all three business areas. In Consumer Care, growth was supported by new product launches for Boost in the US, the continuation of the Meritene roll-out in Europe and continued strong growth of Nutren in Brazil. In Medical Nutrition, the allergy portfolio delivered good growth across all geographies, in particular Alfamino. Novel Therapeutic Nutrition also did well. — SG
