Swiss food giant Nestlé has reported a small rise in first-half net profit and said its results had been affected by poor weather conditions and a challenging trading environment in Western Europe.

The group posted net profit of CHF2.84bn (US$2.28bn) for the first half of 2004, compared to CHF2.78bn in the year-ago period. EBITA increased 1.5% to CHF5.12bn. Consolidated sales rose 2.5% to CHF42.45bn.

"Nestlé's results for the first half of 2004 are resilient in the face of higher raw material prices, poor weather conditions and continued challenging trading conditions in Western Europe," said chairman and chief executive Peter Brabeck-Letmathe.

At constant currencies, sales improved 3.6%, while reported sales grew 2.5%. Nestlé said prices increased 1.8%, compared with 3.4% in 2003, reflecting a more normal trading and currency environment.

Nestlé said trading conditions in Western Europe remained challenging throughout the first half of the year and were exacerbated by the poor weather contrasting sharply with the 2003 heat wave. This had a particular impact on ice cream and water sales. Among the other categories, Nestlé said culinary and healthcare nutrition performed well.

The company added that Western Europe would see a heavier product launch programme in the second half of the year.

Elsewhere, Nestlé said its Eastern European operations continued to perform well, while its operations in the Americas also delivered a good performance. However, the company said the frozen food sector of its US grocery business was under temporary pressure and new product launches were being planned.