Nestlé Holdings Inc., a wholly-owned unit of Swiss food and nutrition giant Nestlé S.A. (NSRGY.PK), on Friday reported a 48 percent surge in profit for the first half of fiscal 2012 on higher sales and lower overheads and distribution costs.
Nestle Holdings manufactures food and beverages with a strategic focus on the areas of nutrition, health and wellness. The company's products are distributed primarily in the U.S.
The company noted that despite continued weak economic conditions in the U.S. with high unemployment and rising commodity prices, it was able to deliver profit growth.
The increase in profit reflects reductions in overheads and distribution costs that offset higher manufacturing input costs and marketing, general and administrative expenses.
Segment wise, Nestle USA Brands sales declined 2 percent to $4.61 billion, primarily due to a decline in the frozen food category. This was partly offset by growth in coffee enhancers, soluble coffee and confectionery.
Nestle Purina PetCare sales rose 7 percent to $3.20 billion, driven by new product innovation such as Beneful Baked Delights and Friskies Plus.
Nutrition sales declined 4 percent to $1.20 billion, as growth in life insurance and performance nutrition products was offset by a decrease in the Jenny Craig weight management business and infant formula products.
Other business sales grew 11 percent to $0.95 billion, due mainly to strong growth in Nespresso brand coffee, the Nestle Professional business and the Health Sciences business.
Nestle Holdings' net income for the six months ended June 30, 2012 was $659.31 million, up from $444.89 million in the same period last year.
Trading operating profit for the half-year period rose 5 percent to $1.10 billion from $1.05 billion in the year-ago period.
Net sales for the six-month period rose 2 percent to $9.96 billion from $9.78 billion in the prior-year period.
Looking ahead, Nestle Holdings noted that there is a risk of a very slow and volatile recovery of the US economy. However, the company said it is well positioned with strong, high quality brands that will be used across a variety of new product launches.
In early August, parent company Nestle SA reported a 9 percent increase in profit for the first half of the year with growth across all its regions, helped partly by pricing.
NSRGY.PK last traded on Thursday at $62.67, up $0.28 on a volume of 343,200 shares.
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by RTT Staff Writer
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