| 16.6°C Dublin

Better than expected Q2 profit from Nestlé

Close

Nestlé's organic sales growth, which excludes currency swings and acquisitions, eased to 1.3pc in the three months to June, from 4.3pc in the first quarter, as the effect of stockpiling waned. Photo: AFP/Getty Images

Nestlé's organic sales growth, which excludes currency swings and acquisitions, eased to 1.3pc in the three months to June, from 4.3pc in the first quarter, as the effect of stockpiling waned. Photo: AFP/Getty Images

AFP/Getty Images

Nestlé's organic sales growth, which excludes currency swings and acquisitions, eased to 1.3pc in the three months to June, from 4.3pc in the first quarter, as the effect of stockpiling waned. Photo: AFP/Getty Images

Nestlé struck a more optimistic note than peers yesterday, forecasting 2-3pc underlying sales growth this year as demand for high-end pet food and health products helped it eke out growth in the second quarter.

Rivals Danone and Unilever posted a fall in quarterly sales and gave no outlook for the year because of coronavirus.

The world's largest food manufacturer's previous guidance for 2020 sales growth "above 3.5pc" did not include the impact of the Covid-19 crisis, CEO Mark Schneider told Reuters.

"We now have a much better understanding of how Covid-19 affects our business," Mr Schneider said.

He added that Nestlé, known for brands including Nespresso coffee and Purina pet food, had wanted to provide stability to investors.

Packaged food companies have weathered the crisis better than other industries as consumers bought coffee, pasta, pet food and infant formula in bulk during Covid-related lockdowns.

Nestlé's organic sales growth, which excludes currency swings and acquisitions, eased to 1.3pc in the three months to June, from 4.3pc in the first quarter, as the effect of stockpiling waned.

Mr Schneider said pet care had outperformed thanks to strong online sales, and coffee consumption at home - which Nestlé strengthened recently thanks to its partnership with Starbucks - was resilient.

Health products like vitamin pills also got a boost from Covid-19 worries, Mr Schneider said.

He said business in China, the first country to be hit by coronavirus, was on the mend and lockdown-related production difficulties in India were over.

Analysts applauded the better-than-expected first-half sales growth and improved margin of 17.4pc.

Net profit also beat expectations at Sfr5.9bn (€5.48bn).

"A strong result and confident outlook in the circumstances that looks set to preserve Nestlé's premium rating and reputation," Jefferies analysts said in a note.

Shares, which have risen more than 5pc so far this year, rose slightly, outperforming small losses on the wider market.

Nestlé said the overhaul of its business toward high-margin foods such as plant-based burgers remained on track with US and China sales due.

Reuters