Nestle warns of slower second half

Food and beverages giant Nestle today warned of a slower second half to the year after rising raw material costs prompted it to hike prices.

Despite the pressure on sales volumes, the England-based company said it still expected to meet targets for the year, following an 18.4% gain in net profits to 4.9 billion Swiss francs (€3bn) in the six months to June 30.

The half-year performance included a “notable performance improvement” for the company’s Nestle Rowntree confectionery business in the UK.

Sales across the group rose 8.4% to 51.11 billion Swiss francs (€31.2bn) in the first half, including growth of 7.4% when acquisitions are stripped out.

Nestle said the first half performance reflected strong volume growth and the impact of price increases needed to offset rising costs.

It added: “In the second half of the year, these higher prices are likely to slow volume growth slightly, while the increasing impact of higher raw material costs, particularly milk, will heighten pressure on margins.

“Nonetheless, the strong start to the year allows Nestle to expect above-target organic growth as well as a further sustainable improvement in margins for the full year.”