Excellent first half year for Nestlé

In the first six months of 2008, consolidated sales of the Nestlé Group amounted to CHF 53.1 billion, an increase of 3.8% over the same period last year, driven by organic growth of 8.9%, including real internal growth of 3.5%. Foreign exchange had a -8.3% impact on sales, while acquisitions net of divestitures, primarily driven by the acquisition of Novartis Medical Nutrition and Gerber, added 3.2% to sales. According to the company, the Group s EBIT grew by 6.1% to CHF 7.3 billion, resulting in an EBIT margin of 13.8%. This represents a 60 basis point improvement in constant currencies over the first half of 2007. Foreign exchange reduced the Group s EBIT margin by 30 basis points, to 30 basis points reported.

With sales of CHF 49.3 billion, Food and Beverages achieved organic growth of 8.9%, including real internal growth of 3.2%, and was the Group s main contributor to growth and EBIT margins. With an EBIT growth of 6.7%, Food and Beverages EBIT margin was up 50 basis points in constant currencies over last year. Foreign exchange reduced Food and Beverages EBIT margin by 20 basis points, to 30 basis points reported.

The Zone Europe reported sales of CHF 13.8 billion, 5.8% organic growth and 2.3% real internal growth. Western European markets such as Great Britain, France, Germany and the Iberian region achieved good organic growth, while the Zone experienced double-digit organic growth in Eastern Europe, particularly in Russia and Poland. Overall, soluble coffee, confectionery, PetCare and culinary products were among the stronger categories. The confectionery segment achieved sales of CHF 5.4 billion, 7.7% organic growth and 1.7% real internal growth. The successful Kit Kat relaunch in Western Europe continued and the brand showed good performances in emerging markets such as India, the Middle East and Russia, achieving 15.4% organic growth globally. Increasing consumer interest in nutritious snacking alternatives resulted in new product launches such as Nesquik bars with added calcium in Mexico, Chile and Turkey. The UK business performed well due to its focus on key brands and the benefit of restructuring at the York factory.