Nestle sales grow in North America thanks to focus on health and nutrition

Swiss food and beverage giant Nestle says first-half profit dipped due to a one-time tax expense even as revenues edged up behind growth in its key North American food business and despite a slowdown in the Chinese market.

The maker of Kit Kat chocolate bars, Lean Cuisine meals, Maggi noodles and Gerber baby foods said Thursday that its net income was 4.10 billion Swiss francs ($4.27 billion), down from 4.52 billion francs a year earlier, due to a 400-million franc deferred tax adjustment.

Sales rose under one per cent to 43.16 billion francs.

Food companies like Nestle, which is based in Vevey, Switzerland, have sought to burnish their reputations on health and nutrition amid concerns about growing obesity rates and pressure they have faced for marketing foods full of fat, salt and sugar. Nestle in June announced it is bringing in health care executive Ulf Mark Schneider as its next CEO starting Jan. 1.

Unveiling the latest results, Nestle decried "historically low levels'' of pricing in the first half of 2016, but chief financial officer Francois-Xavier Roger said in a conference call that the company was "confident that pricing is going to improve'' in the coming months.

Nestle affirmed its outlook for the remainder of this year.

Innovations and marketing investment helped underpin growth in its North American frozen meals business, particularly at Lean Cuisine and Stouffer's, Nestle said. But growth in the Chinese food and beverage market slowed significantly, with its Yinlu food unit dragging on performance.

Roger said demand is "clearly slowing'' in China, where Nestle faces "much more price competition.'' He said the company is nevertheless gaining market share in the world's most populous country.

Nestle is working to overcome a setback to its Asian operations last year after pulling Maggi noodles from store shelves in India for five months after the popular snack was found to contain lead above permissible limits.