Nestle profit down but revenue up in H1

Swiss food and beverage company Nestle reported a drop in profit but a rise in revenue for the first half of the year.

Net profit in the period came in at CHF4.1bn, down from CHF4.5bn in the first half of last year, which the company attributed to a one-off, non-cash adjustment to deferred taxes.

Revenue, however, rose to CHF43.2bn, up 3.5% on an organic basis.

Nestle missed its target of 5% to 6% annual sales growth for three years but the company still expects organic growth this year to be in line with last year’s 4.2%.

The group said on Thursday that pricing has reached a historically low level owing to deflationary environments across a number of developed markets and low commodity prices.

Chief executive officer Paul Bulcke said: “The first half of 2016 was in line with our expectation with growth almost entirely driven by volume and product mix, yielding further market share gains. While we continued to address challenges in China, we enjoyed good performances across the US, Europe, South East Asia and Latin America and expect this to continue in the second half. We also expect pricing, which reached historically low levels in the first half, to recover somewhat in the coming months.

“In these times of rapid change, we keep our focus on profitable growth by further investing in innovation, R&D, brand support and digital to engage with our consumers, meeting their changing needs. Overall our first half performance allows us to reconfirm our outlook for the full year.”

At 1230 BST, shares were up 1% to CHF79.15.