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Nestlé reports organic growth of 2.8% in 1H despite slowdown as coffee remains resilient

Nestlé
Nestlé's corporate headquarters building in Vevey, Vaud, Switzerland

MILAN – Nestlé posted a first-half net profit rise, but experienced slower growth in the majority of its core markets in the second quarter due to the coronavirus pandemic. The food and beverage giant said Thursday net profit for the period was 5.9 billion Swiss francs ($6.44 billion) compared with CHF5.07 billion for the year-earlier period.

The Swiss-headquartered company reported sales of CHF 41.2 billion ($45 billion approx.), representing a 9.5% year-over-year decrease, with results impacted by the divestment of its Skin Health and US ice cream business last year.

Organic growth reached 2.8%. After a stronger-than-expected start to the year, organic growth moderated in the second quarter to 1.3%, reflecting the severe impact of movement restrictions on out-of-home businesses and some consumer destocking.

The company said it expects 2% to 3% growth this year and an improvement in its underlying trading operating margin.

Real internal growth (RIG) – a company metric that strips out M&A and pricing – reached 2.6%. Pricing contributed 0.2% and was positive in all three Zones in the second quarter.

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