These factors resulted in a decline in Nestlé Group sales of 1.5%, to SFr52.3bn. Food and Beverages’ sales reached SFr48.3bn, with organic growth of 3.4%, including real internal growth of 0.1%. This builds on the strong first half of 2008 when Nestlé achieved organic growth of 8.9%.
The Group’s EBIT grew to SFr7.4bn, resulting in an increased EBIT margin of 14.1% of sales. This represents a 30 basis points improvement, both in constant and reporting currencies. Food and Beverages’ EBIT margin was up 20 basis points in constant currencies and 10 basis points reported, to 12.4%.
The acceleration of Nestlé Continuous Excellence, the Group’s efficiency programme, contributed to a 30 basis points decline in both the cost of goods sold and distribution costs. The Group’s commitment to brand building, including innovation and renovation, is reflected in the 10 basis points increase in consumer-facing marketing and a 20 basis points increase in Research and Development.
Nestlé’s net profit margin reached 9.7% of sales. Underlying earnings per share grew by 3.5% to SFr1.46, up 8.5% in constant currencies.
On 30 June 2009, the Group’s operating cash flow was SFr6.4bn, significantly up from SFr3.5bn in the first half of 2008, reflecting its commitment to capital efficiency. The Group’s net debt was SFr17.4bn, down from SFr25.8bn at the end of June 2008. The continuing share buyback programme and the payment of the dividend together resulted in about SFr6.5bn of cash returned to shareholders in the first half of 2009.
“With 3.5% organic growth and a 30 basis point EBIT margin improvement, Nestlé delivered a combination of growth and increased profitability in the first half of the year, and this in a very challenging business environment,” said Paul Bulcke, Nestlé CEO. “The success of our efficiency initiatives enabled increased investment in consumer-facing marketing and R&D, which leads me to expect an acceleration in organic growth in the second half of 2009. Furthermore, Nestlé’s healthy cash flow over the first half allowed us to return about SFr6.5bn in cash to shareholders. The Group remains committed to its strategic direction focused on sustainable, long-term profitable growth and is well placed to capture opportunities as economic conditions improve.”
Source: Nestlé
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