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Nestlé: Accelerated Growth during the First Half of 1999

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Vevey

With consolidated sales of CHF 18.6 billion and a real internal growth rate of 4.7 percent in the second quarter, the Nestlé Group confirms the overall acceleration pointed out earlier. For the semester as a whole, Nestlé realized CHF 35.3 billion in sales and a real internal growth rate of 2.1 percent. Sales and growth rate for the second quarter thus showed a marked improvement as well as a significant acceleration over the CHF 16.7 billion reached during the first three months, when real internal growth was still slightly negative (-0.5 per-cent).

Compared to a particularly favorable first half of 1998, during which sales grew by 5.6 percent, consolidated Group sales in Swiss francs remained stable. At comparable structure, however, without acquisitions net of divestitures and at constant exchange rates, consolidated sales increased by 2.7 percent.

During the semester as a whole, the Swiss franc once again rose versus several other currencies. The influence on sales, with -4.4 percent, was however less pronounced than in the first quarter. Acquisitions net of divestitures contributed 1.7 percent while the other factors, such as price adaptations and other elements, amounted to 0.6 percent.

The growth results mainly from the good business development in several large European markets, in Japan, Mexico and in the United States. While Russia, Brazil and a number of Latin American markets are still faced with economic crises, virtually all the Group's operational companies in South-East Asia have reverted to growth.

Above average sales growth was noted in the Group's water business, in the joint ventures covering breakfast cereals and dermatological products, as well as in Alcon. Nutritional products and chilled products achieved good sales, as did petcare products. The food service area also saw a very satisfactory development.

For the year as a whole, Nestlé – barring unforeseen negative factors, particularly in the evolution of foreign exchange markets – expects again an improvement in sales and profits.

The Group will publish its half-yearly consolidated income statement and balance sheet on September 24, 1999.