Slower confectionery sales in the UK and the highest coffee prices in seven years has failed to knock a "very strong" six months for Nestle, the group has claimed.

The maker of Nescafe coffee and Smarties said net first half profits to June 30 were up 11 per cent to 4.2 billion Swiss francs (£1.8 billion) compared with the same period last year.

Sales at the firm also grew by 11 per cent to 47.1 billion Swiss francs (£20.3 billion) as it fought rising prices of coffee beans, packaging and sugar.

Nestle boosted its earnings before interest and tax (EBIT) margin - a key profitability yardstick - by 40 basis points to 12.8 per cent in the first half.

Nestle has long-term contracts with coffee producers and is being affected by the high price as it tries to negotiate fresh deals for the next two years.

The price of robusta coffee beans used to make Nescafe has jumped 50 per cent in the past 12 months.

Prices have risen amid dwindling global supplies and lower exports from Vietnam - the world's biggest producer of robusta coffee - where heavy rain has disrupted operations.

Nestle said it did not expect price rises to be passed on to the customer in the second half of the year, although it admitted it was an option in the future.

"Our costs for the full year of 2006 are already fixed and there should be no surprises," said chief executive Peter Brabeck-Letmathe said.

The company, which has a UK base in Croydon, said it had managed to counter rising fuel costs by successful hedging and efficiency programmes.

In the UK and Europe, it said Nescafe and milkshake brand Nesquik had enjoyed strong sales, but confectionery had slowed because of product streamlining.

The slowdown in UK confectionery sales reflected a decision to tighten its portfolio following the unsuccessful launch of a number of KitKat brands.

Chairman and chief executive Peter Brabeck-Letmathe said: "During the first half of 2006 the group delivered excellent levels of growth and profit margin.

"Continued input cost pressures were outweighed by cost and working capital discipline, as well as the effectiveness of our efficiency programmes, reflecting our ability to improve our margins even in tough economic conditions."

The figures topped most analysts' expectations.

Analyst Rene Weber at Swiss bank Vontobe said the numbers confirmed Nestle outperformed Cadbury and Unilever in organic growth.

"The margin increase in the first half of 2006 of 40 points is ahead of the peer group," he added.

Kepler Equities analyst Jon Cox said Nestle, which bottles Perrier water, produced "an excellent set of figures" with the company's cost savings and hedging strategy offsetting input costs.

"The US and Asia were strong while Europe is obviously experiencing a recovery," he said.

Nestle has UK factories in York, Castleford, Halifax, Hayes, Newcastle, Burton, Cuddington in Cheshire, Dalston in Cumbria and Girvan in Ayrshire. It also operates distribution depots in York and Bardon in Leicestershire.