Nestle's Coffee Capsule Business Grew 25%

Profits for first half of year were up 7.5%

Nestle, the world's biggest food and beverage group, on August 11 posted a 7.5% increase in first-half net profit as it braced for a more challenging period in the coming months.

Net profit for the first six months of the year reached 5.5 billion Swiss francs (US$5.2 billion), the group said.

Income grew strongest in the Asia, Oceania and Africa region, up 11.7%, followed by the Americas at 7.2% Sales in Europe remained stagnant, however. Sales in Europe, Nestle's second biggest market after the Americas, continued to lag behind the rest of the world, with an increase of 2.5%.

Overall sales totaled 55.3 billion francs, up 5.7%.

"We have increased investment in our brands, people and capabilities and have prepared the company for a more challenging second half," chief executive Paul Bulcke said.

Nestle maintained its target of organic growth averaging 5.3% over the full year, below the accelerating growth rate of 6.3% achieved in the first half.

The group said it had taken advantage of a deeper distribution and the roll out of cheaper products in emerging nations, where it posted 10% growth in its business.

However, Nestle said sales of bottled water in developed nations had returned to growth after falling consumption over a couple of years under the pressure of environmental concerns in Europe and North America. Bottled water sales in emerging nations continued to boom with near 20% organic growth.

Nestle's coffee capsule business, which is set to face growing competition, grew by 25% with sales of more than three billion Swiss francs.

Copyright Agence France-Presse, 2010

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