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Nestle revenue, profits rise

Sales in foreign countries drive gains as company's acquisition of Kraft approaches.

August 11, 2010|By Bill Kisliuk,

The parent company of Glendale-based Nestle USA reported increased revenue and profits in the first six months of 2010, with much of the strength in developing markets overseas.

Financial officials for the global food giant reported revenues of nearly $51 billion, a gain of more than 6% compared with the same six-month period last year. Profits were $5 billion in the same period, up from $4.5 billion last year.

In a conference with investors at the company's Swiss headquarters, Chief of Investor Relations Roddy Child-Villiers said growth in Asia and Africa led the gains. The Americas unit also grew, driven mostly by sales in Latin America.


In North American markets, revenues grew partly on the basis of double-digit increases in the sales of the Beneful dog food brand, ice cream products, including Haagen-Dazs and the low-calorie Skinny Cow brand, and an uptick in demand for bottled water.

Child-Villiers said the frozen food market in North America is "lackluster," with a bright spot being the DiGiorno brand of frozen pizzas the company acquired in March.

The company, with operations around the world, employs roughly 1,200 people in Glendale and 21,000 in the United States.

Jim Singh, Nestle's chief financial officer, said the company has upgraded its revenue expectations for the remainder of the year.

Concerns for the company going forward include the volatile international market for certain commodities, especially milk, he said.

"Dairy is one area where we are seeing an increase in cost," Singh said.

Nestle will complete its $3.7-billion acquisition of Kraft, a deal announced in January, during the third quarter of 2010, he added.

This month, the company that already owns Cheerios, Coffee Mate, Nescafe, Power Bars, Alpo and Friskies announced two more acquisitions.

Earlier this month, Nestle bought United Kingdom-based Vitaflo, which makes nutrition products designed for people with genetic disorders affecting their ability to eat and digest certain nutrients. Nestle did not reveal what it paid for the company.

And on Tuesday, Nestle became the majority shareholder for Guatemalan food manufacturer Malher Group, which makes powdered beverages and food products for distribution in Central and South America and the Caribbean.

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