Food and beverage sales feed Nestlé profit

Nestlé has announced a profit of SFr5.21 billion ($4.91 billion) on consolidated sales of SFr53.1 billion for the first six months of 2008.

The result, the Vevey-based food giant said on Thursday, represented a 6.1 per cent increase in profits and a 3.8 per cent increase in revenues compared with the same period last year.

“These figures build on the strong momentum gathered from last year’s milestone results,” Paul Bulcke, Nestlé’s new chief executive officer, said.

Sales from the firm’s food and beverage unit accounted for SFr49.3 billion, representing a 6.7 per cent growth in earnings before interest and taxes.

The world’s largest food company performed most strongly in Asia, Oceania and Africa, where growth increased 14.2 per cent, reflecting the group’s nutrition, health and wellness strategy. Growth in Europe was up 5.2 per cent.

Nestlé said that the cost of goods rose to 48.8 per cent of sales, reflecting higher raw material costs. The company was able to reduce marketing and administration costs, which amounted to 33.3 per cent of sales.

Earnings per share rose 8.6 per cent to SFr1.39.

The company said it would be accelerating its share buyback programme, spending around SFr9 billion to acquire its own stock in 2008. By the end of the year, it will have bought back SFr13 billion of the SFr25 billion worth of shares in the programme.