Nestle said it would return profits into a $21 billion share buyback programme and shun major acquisitions as pricing power helped it overcome soaring input prices to post a forecast-beating earnings rise.
The world's largest food company reported an 18.4 per cent increase in net profit for the first half of 2007 to 4.916 billion Swiss francs ($4.1 billion) today and said it was likely to beat its own results forecasts for the full year.
Nestle shares jumped to the top of the European gainers list in an overall weaker market.
"The strong start to the year allows Nestle to expect above-target organic growth as well as a further sustainable improvement in margins for the full year," Nestle said in a statement.
Chief Executive Peter Brabeck unveiled a surprise 25 billion franc share buyback and said he expected no major acquisitions in the future, just potential bolt-on buys, as the group digested recent medical and infant nutrition purchases.
"It is now time to consolidate," he told CNBC television in an interview following the results release. "We do not see any major acquisition coming up."
Sales rose 8.4 per cent to 51.1 billion francs as the company pushed through price increases to offset rising input prices for agricultural commodities such as coffee and cocoa. Organic sales growth in the period was 7.4 per cent.
Nestle shares rose 5.5 per cent to 476.5 Swiss francs at 8am as analysts focused on its earnings and sales growth, its improved 2007 outlook and the possibility of asset sales.