Nestlé reports strong performance

In the first six months of 2006 consolidated sales of the Nestlé Group amounted to CHF 47.138bn, an increase of 11.0% over January-June 2005. Earnings before interest and tax (EBIT) increased even more strongly by 14.5% to CHF6bn, resulting in an improved operating margin of 12.8%, up 40 basis points. Net profit grew 11.4% up to CHF4.1bn with a net margin of 8.8%.
The increase in reported sales was mainly driven by above-target organic growth of 6.4%, resulting from a historically high real internal growth of 4.8%, as well as a pricing effect of 1.6%. The Group s core food, beverage and nutrition business supplied the bulk of organic growth (6% of a total of 6.4%), based on strong real internal growth of 4.3% and yielded three fourths of the margin improvement.


Chocolate, confectionery and biscuits showed 1.9% real internal growth and 3.5% organic growth. The EBIT margin declined 50 basis points, mainly due to the UK product streamlining and also reflecting increased brand support in certain markets.
There was strong growth in the Americas and in Asia, Oceania and Africa whilst improvement in the overall economic climate during the first half in Western Europe was reflected in higher consumer confidence and an acceleration of Nestlé s real internal growth to a level not seen since 2002.