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July 26, 2019, 4:17 a.m. EDT

Nestle backs 2019 view, helped by Starbucks deal

By Cristina Roca

Nestle SA (NESN.EB) said Friday that net profit in the first half declined but it is on track to meet its 2019 objectives, and gave more precise targets for its top line and margin progression.

Net profit for the period was 5 billion Swiss francs ($5.07 billion) compared with CHF5.8 billion the prior year, when net profit benefited from the disposal of its U.S. confectionery business. Underlying trading operating profit rose 17%.

The Swiss food-and-beverage company said sales in the first half were CHF45.46 billion, up 3.6% on an organic basis and roughly in line with analyst expectations of CHF45.59 billion, according to a consensus estimate provided by FactSet.

"Our growth was broad-based with our largest market, the United States, performing particularly well," Nestle Chief Executive Mark Schneider said. Organic growth in the Americas region was 3.9%. The company said its deal with Starbucks Corp. (NAS:SBUX) and its pet-care business were main growth drivers.

Real internal growth for the period was 2.6%, Nestle said.

For 2019, Nestle said it expects organic sales growth of about 3.5% and its underlying operating profit margin to be at or above 17.5%. Margin expansion should accelerate during the second half of the year, Nestle said.

Nestle also continues to expect its underlying earnings per share in constant currency and capital efficiency to increase for the full year.

The company said its portfolio management is on track. Nestle expects the sale of its skin health business to be completed in the second half of the year, and said the strategic review of its Herta charcuterie business should be completed in late 2019.

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