Nestlé, the world’s largest food company, has reported a 6.1% increase in first half profits, despite bottled water sales being hit by environmental concerns and rising raw material costs.
The company says profits increased to 5.21bn Swiss francs (£2.52bn) compared to the first half of 2007, and sales also rose by 3.8% to 53.06bn francs. It says this has been driven by the relaunch of KitKat and improved margin growth in confectionery and pharmaceuticals.
The increases come despite rises in raw material costs, which it admits have been off-set by a decline in marketing and administration costs. The company saw a 3.1% decline in bottled water sales, particularly in Western Europe and North America. It attributes the dip to difficult economic conditions and the “perceived” environmental issues around bottled water. It forecasts an improvement by the end of the year due to strong sales elsewhere in the world.
Paul Bulcke, Nestlé chief executive, says: “These figures build on the strong momentum gathered from last year’s milestone results.”
He adds that the company’s strategic focus on health and nutrition has put it in good shape and helped it increase sales and profits despite tough market conditions.