08/09/2012 03:49 EDT | Updated 10/08/2012 05:12 EDT

Nestles posts strong rise in H1 profits but predicts challenging end to year

GENEVA - Swiss food and drinks giant Nestle SA posted a 8.9 per cent rise in first-half profits but predicted that the remainder of 2012 will be challenging.

Helped by strong demand from emerging markets, price rises and cost-cutting, the world's biggest food and beverage maker said its net profit rose to 5.120 billion Swiss francs ($5.27 billion) from January to June, up from 4.703 billion francs in the comparable 2011 period.

The Vevey, Switzerland-based company's said those profits came on first-half sales of 44.1 billion Swiss francs ($45.37 billion), which was 7.5 per cent up on last year's equivalent of 41 billion francs a year ago.

The maker of dozens of household brands such as Nescafe, Haagen Daz and Jenny Craig reaffirmed its outlook for the rest of the year despite what it called a "tough trading environment, especially in developed markets."

Nestle said it expects underlying sales growth of 5 to 6 per cent for the remainder of the year due to its strong first half.

Chief Executive Paul Bulcke said the first half shows the company is "making the right choices at the right time" and its strategic roadmap is working.

"We are continually opening new routes-to-market to reach emerging consumers, and using new media to increase both our direct engagement with consumers and our return on brand investment," he said. "This approach has delivered profitable growth in both emerging and developed markets."