Nestle sees boosts in growth, profits and sales

Swiss-based food and drink company Nestle SA (SWX: NESN) saw bumper performance over the first half of 2019; with increases in organic growth, sales and profit.

The Company booked organic profit growth of 3.6% on-year, led by its US and Brazil operations. Total sales were also up by 3.5% to CHF 45.5 billion, with net acquisitions having a positive impact of 1.1% and foreign exchange having a detracting effect of 1.2%.

Underlying Trading Operating Profit reached 17.1% and Trading Operating Profit increased to 15.5%, up 100 and 90 basis points respectively. Underlying EPS also rose 15.7% on constant currency and 14.6% on a reported basis to CHF 2.13. Following last year’s hike led by the disposal of the Group’s confectionery business, this year’s EPS was down 12.3%.

Nestle noted that its free cash flow increased by 40.4% to CHF 4.1 billion. The Group said its portfolio management was on track and its full year guidance projected sales growth of 3.5%, alongside increases in profit margin and EPS.

Nestle comments

Company CEO, Mark Schneider, stated,

“We are encouraged by our first half results and have made further progress toward our 2020 financial goals. Disciplined execution and fast innovation contributed to improved organic growth and profitability. Our growth was broad-based with our largest market, the United States, performing particularly well. Across our categories increased investment behind our brands and in innovation is clearly paying off, as reflected in our strong momentum in PetCare and the return to mid single-digit growth in coffee. Our Starbucks launch has been a great success so far and we plan on further geographic expansion and product innovation to make the most of this unique opportunity. Active portfolio management will continue to sharpen our strategic focus and position the company in attractive high-growth businesses. Our value creation model is clearly delivering the expected results and will support sustained profitable growth.”

Investor notes

The Company’s shares rallied 1.76% or CHF 1.80 to CHF 104.04 a share 26/07/19 17:30 CEST. The Group’s dividend yield currently stands at 2.40%.

Elsewhere, there have been updates from other food and drink retailers; Fuller, Smith and Turner plc (LON: FSTA), Compass Group plc(LON: CPG), SSP Group PLG (LON: SSPG) and Dominos Pizza Poland (LON: DPP).

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Senior Journalist at the UK Investor Magazine. Also a contributing writer at the Investment Observer, UK Property Journal and UK Startup Magazine. Postgraduate of King's College London with a specialisation in Business Ethics. Interested in Development Economics and David Hume.