Swiss food giant Nestlé has proved as safe a bet in the recession as the nation’s deposit accounts. On Thursday, the company reported a 6% improvement in second quarter sales, despite the deteriorating state of the global economy.
Even in Europe, where the Eurozone crisis has deepened economic woes in recent months, Nestlé managed to deliver 2.5% growth.
The share price responded by rising 2% to 60.8 CHF in early trading on Thursday. Consistently strong results, aided by investor appetite for defensive stocks, have helped the Nestlé share price increase by 30% over the past year.
“Nestlé continues to impress by delivering strong results. Even in developed markets it is performing well relative to others and with 40% of sales coming from emerging markets it has a strong driver of growth,” said one analyst.
Back in the UK, it was a mixed picture for Premier Foods. A patriotic boost from the jubilee weekend helped the company deliver a 1.1% improvement in half-year sales, excluding milling, to £757.1m, and a 3.2% rise in underlying trading profit to £53.2m.
The company also said its £40m cost saving target for 2013 would now be achieved by the end of 2012 - hailed by Panmure analyst Graham Jones as “the biggest news” from the results.
The good news initially caused Premier Foods’ share price to leap from 72p to 78p on Tuesday morning. However, the price fell back to where it started from later in the day, and had retreated to 68p by Thursday.
Analysts said there were signs of a genuine recovery. However, the outlook for the baker of Hovis bread was marred by fast-increasing wheat prices, which have increased by more than a third in the past month.
“Premier looks to be achieving some market share gains, but this needs to be weighed against an increasingly certain increase in wheat prices,” said Investec analyst Martin Deboo, estimating that wheat cost Premier £150m a year.
There was positive news for Kerry Foods on Thursday. It reported a 12.6% increase in half-year trading profit to €241m, helped by a strong result for the ingredients and flavours side of the Irish food business. In early trading, the share price increased by almost 4%, to €37.5.