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Nestlé (NESN) has undershot analyst expectations by reporting first half organic sales growth of 3.5% to CHF43.2bn.

This organic growth was composed of 2.8% real internal growth and 0.7% pricing. Nestlé said pricing has “reached a historically low level” due to the deflationary environments across developed markets and low commodity prices.

Nestlé saw organic growth across geographies, with the Americas up 4.7%, Europe, Middle East and North Africa up 2.5% and Asia, Oceania and sub-Saharan Africa up 2.3%.

Foreign exchange rates had an impact of -2.0% on headline growth and the net result of acquisitions and divestitures reduced sales growth by -0.8%.

Trading operating profit was CHF 6.6 billion, with a margin of 15.3%, up 30 basis points on both a reported basis and in constant currencies.

This improved profitability was driven by a gross margin expansion of 130 basis points through cost discipline, portfolio management, premiumisation strategies and an input cost tailwind. It also came despite an increase in investment in R&D, while consumer facing marketing spend was up 8.5% in constant currencies.

Net profit fell CHF0.4bn to CHF 4.1bn due to a one-off, non-cash adjustment to deferred taxes.

Paul Bulcke, Nestlé CEO: “The first half of 2016 was in line with our expectation with growth almost entirely driven by volume and product mix, yielding further market share gains.

“While we continued to address challenges in China, we enjoyed good performances across the US, Europe, South East Asia and Latin America and expect this to continue in the second half. We also expect pricing, which reached historically low levels in the first half, to recover somewhat in the coming months.

“In these times of rapid change, we keep our focus on profitable growth by further investing in innovation, R&D, brand support and digital to engage with our consumers, meeting their changing needs.

“Overall our first half performance allows us to reconfirm our outlook for the full year.”

Nestlé shares are up 0.1% to CHF78.45 in trading this morning and are up 5.2% year-to-date.

Morning update

Australian wine producer Treasury Wine Estates announced its annual 2016 financial results. Reported net profit after tax and earnings per share both more than doubled from the previous corresponding period with NPAT at $179.4m and EPS at 25.1 cents per share, respectively.

TWE’s Chief Executive Officer, Michael Clarke commented: “Our F16 result demonstrates that momentum across our business is accelerating. TWE is now delivering consistent earnings growth and margin accretion on a more balanced, sustainable and quality earnings basis.”

TWE shares rose 11.5% to AUS$10.65 after the announcement.

Later this morning Walmart will announced its second quarter results, with all eyes in the UK on the performance of Asda which reported a 5.7% fall in like-for-like sales during the first quarter. Asda CEO Andy Clarke later stepped to be replaced by the head of Walmart’s Chinese business, Sean Clarke, who began his role in early July.

The latest ONS retail sales figures are also released later this morning.

The FTSE 100 has already regained most of the ground it lost yesterday, up 0.4% so far this morning to 6,884.4pts.

Early movers include PayPoint (PAY), up 2% to 996p, Sainsbury’s (SBRY), up 1.5% to 238p and Devro (DVO) up 1.5% to 250.6p.

Fallers include PureCircle (PURE), down 1.9% to 304.3p, Science in Sport (SIS), down 1.5% to 65p, Greggs (GRG), down 1.4% to 1,014p and Real Good Food (RGF), down 1% to 32.2p.

Yesterday in the City

Better than expected UK jobs figures temporarily boosted the pound yesterday, but were not enough to halt a 0.5% slide in the FTSE 100 back to 6,859.2pts after insurer Admiral warned on the impact Brexit was having on its business.

It was a quieter day for grocery sector stocks, with some notable retailers easing back once more.

Morrisons (MRW) slipped back 1.1% to 187.5p, Tesco (TSCO) was 0.9% down to 156.3p and WH Smith (SMWH), was 1% down to 1,552p.

Other fallers included Majestic Wine (WINE), down 1.5% to 415p, Greggs (GRG), down 1.5% to 1,028p and Conviviality (CVR) 1.4% down to 223.3p.

Glanbia (GLB) shares were up 3.2% to €18.05 after a “strong” first-half performance announced yesterday driven by its performance nutrition division despite the “challenging” dairy market.

Stock Spirits Group (STCK) was up 6.4% to 179p and Nichols (NICL) was up 2.2% to 1,442p.