Nestle raises full-year guidance after H1 organic sales grow 8.1%

ZURICH: Food giant Nestle raised its full-year organic growth guidance to 5-6% after strong demand for coffee lifted organic sales by a better-than-expected 8.1% in the first half of the year.

Food groups are grappling with surging commodity costs that are hitting margins, but Nestle, with well-known brands like Nescafe coffee or Purina pet food, may be better placed than others to offset them through price increases and efficiency gains.

Peer Unilever said last week it expected cost inflation to be in the high-teens in the second half of the year.

Organic sales growth at Nestle accelerated to 8.1%, from 2.6% in the year-ago period, the world's biggest food group said in a statement on Thursday. This was ahead of an estimate for 7.4% growth in a company-compiled consensus.

Growth accelerated to 8.6% in the second quarter, from 7.7% in the first three months of the year.

Net profit rose slightly to 5.9 billion Swiss francs ($6.49 billion), also ahead of a 5.84 billion estimate in the consensus.

The company based in Vevey on Lake Geneva raised its full-year guidance for organic sales growth to 5-6%, after previously aiming for growth in excess of the 3.6% achieved last year. It is targeting an underlying trading operating profit margin around 17.5% this year.