ZURICH (B)--Nestle SA, the world's largest food company, said first-half net profit rose 35% as sales improved in Asia and Latin America.
Net profit for January to June was 2.8 billion Swiss francs ($1.6 billion), up from 2.08 billion in the same period last year and well above market expectations. Earnings per share rose to 72.7 francs from 53.5 francs.
The Swiss-based group, whose products include Nescafe coffee and Baby Ruth candy, said sales rose 10% to 38.8 billion francs from 35.3 billion last year.
Growth was particularly strong in Asia, Oceania and Africa, in Latin America, except Brazil, and in Eastern Europe.
Western Europe and North America only showed "moderate" sales growth. Bottled water and pharmaceuticals were particularly successful, Nestle said.
Shares of Nestle were 2.97% higher at 3,680 francs by mid-morning in Zurich.
"The quality of the results are high because the deviations from the expectations were mainly the high real internal growth rate, and the higher-than-expected margin increase," said Christian Burger of Bank Sarasin.
Real internal growth rose to 4.5% in the first half, from 2.1% last year, boosted by greater operational efficiency, a more streamlined product portfolio, industrial restructuring and lower raw material prices.
Profitability gains were most noticeable in emerging countries, while the U.S. showed an improvement and Western Europe remained stable.
Burger doesn't think Nestle can maintain real internal growth at first-half levels through the rest of 2000, "but we expect it to be able to reach its 4% target."
For the second half Nestle predicted more moderate improvements in sales and profits, and warned against extrapolating January-June sales and profits through the rest of the year.
"Nevertheless we remain confident in our potential to achieve performance improvements for the full-year, and, barring major unforeseen events, to reach higher sales and profits than in 1999," the company said.
Selling prices contributed 0.4% to sales growth, with price rises mainly reflecting higher inflation in emerging markets.
Proceeds from disposals were 469 million francs, mainly related to the sale of Findus frozen foods.