VEVEY, Switzerland — Nestlé has reported accelerating sales and a 19 percent jump in net profit to CHF5.8 billion (US$5.8 billion) in the first half of the year as markets in the US and China improve. Earnings per share have also increased by 21.4 percent to CHF 1.92 (US$1.94).
Last year, the Third Point activist hedge fund of Daniel Loeb invested $3.5bn in a 1.25 per cent stake in the Swiss group. Earlier this month, it complained Nestlé said still had a “muddled strategic approach” and remained “insular, complacent and bureaucratic”.
Key figures:
- Organic growth of 2.8%, with 2.5% real internal growth (RIG) and pricing of 0.3%.
- Total sales increased by 2.3% to CHF 43.9 billion (6M-2017: CHF 42.9 billion). Acquisitions and divestments netted to zero. Foreign exchange reduced sales by 0.5%.
- Underlying trading operating profit margin was 16.1%, an increase of 20 basis points in constant currency and on a reported basis.
- Trading operating profit margin was 14.6%, a decrease of 50 basis points on a reported basis due to higher restructuring costs and net other trading items.
- Earnings per share increased by 21.4% to CHF 1.92 on a reported basis. Underlying earnings per share increased by 9.2% in constant currency and by 10.4% to CHF 1.86 on a reported basis.
- Free cash flow increased by 52%, from CHF 1.9 billion to CHF 2.9 billion.
- Full-year guidance for 2018 confirmed, with organic sales growth expectation narrowed to around 3%; underlying trading operating profit margin improvement in line with our 2020 target. Restructuring costs1 are expected at around CHF 700 million. Underlying earnings per share in constant currency and capital efficiency are expected to increase.
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