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Nestlé Delivers Organic Growth in Challenging Environment

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Nestlé Delivers Organic Growth in Challenging Environment

Nestlé Delivers Organic Growth in Challenging Environment
February 19
15:25 2016

The strength of the Swiss Franc has impacted on Nestlé’s 2015 financial results with trading operating profit of SFr13.4 billion down 20 basis points on a reported basis but up 10 basis points in constant currencies. Group sales fell 3.1% to SFr88.8 billion including a foreign exchange impact of -7.4%, while acquisitions, net of divestitures, added 0.1% to sales.

However, Nestlé’s organic sales growth was 4.2% for the year, comprising 2.2% real internal growth and 2.0% pricing. Organic growth was broad-based across geographies and categories – 5.8% in the Americas (AMS); 3.5% in Europe, Middle East and North Africa (EMENA); and 1.9% in Asia, Oceania and sub-Saharan Africa (AOA).

Trading operating profit margin at 15.1% was up 10 basis points in constant currencies. The improvement was the result of careful pricing and significant cost reductions which were partly reinvested in promotional and marketing activities to generate future growth.

Paul Bulcke, chief executive of Nestlé, comments: “In 2015 we delivered profitable growth at the higher end of the industry in what is still a challenging environment. This profitable growth was on the back of consistent performances in previous years. Our organic growth of 4.2% was supported by increased momentum in real internal growth combined with continued margin improvement. Additionally, we grew or maintained market share in the majority of our categories and markets.”

Paul Bulcke, chief executive of Nestlé.

Paul Bulcke, chief executive of Nestlé.

He continues: “At the same time we continued to invest for the future with increased support behind our brands and further development of our new platforms in nutrition and health as well as E-commerce. We kept up the focus on portfolio management, turning around our frozen food business in the United States, disposing of non-core businesses and forging a new partnership to create a leading player in ice cream.”

Nestlé’s 2015 net profit was SFr9.1 billion. The reduction of SFr5.4 billion versus last year was mostly due to the one-off impact from the disposal in 2014 of part of the L’Oréal stake combined with the revaluation of the Galderma stake. There was also some effect from foreign exchange.

Looking ahead, Paul Bulcke says: “We anticipate that our trading environment in 2016 will be similar to previous years with even softer pricing. As such we expect to deliver organic growth in line with 2015, with improvements in margins and underlying earnings per share in constant currencies, and capital efficiency.”

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