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

© Reuters. FILE PHOTO: A logo is pictured on the Nestle research center at Vers-chez-les-Blanc in Lausanne, Switzerland August 20, 2020. REUTERS/Denis Balibouse/File Photo

ZURICH (Reuters) -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 (LON:) 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.

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