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Solid Sales Growth and Bumper Profit at Nestle

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Solid Sales Growth and Bumper Profit at Nestle

Solid Sales Growth and Bumper Profit at Nestle
February 18
14:01 2011

Reporting growth across all regions and categories, Nestle achieved a 6.2% organic growth in 2010 group sales to SFr109.7b (Eur84.9b) with real internal growth of 4.6% and tripled net profits to SFr34.2b, reflecting the disposal of its Alcon shareholding. However, excluding the exceptional net profit of SFr24.5b from the Alcon disposal, 2010 group net profit was actually down 6.7% to SFr9.7b from SFr10.4b in 2009.

The continuing operations achieved organic sales growth of 6.0% and real internal growth of 4.4%. Food and Beverages achieved good growth with market share gains in all categories and regions. Organic growth in emerging markets stood at 11.5%, underlining the increasingly important role they will play in Nestle’s future development. Organic growth for Food and Beverages was 5.7% in the Americas, 3.7% in Europe and 10.2% in Asia, Oceania and Africa.

Nestle improved its group EBIT margin from continuing operations by 30bps to 13.4%, while increasing the investment behind its brands with marketing expenses up by 100bps, and consumer facing marketing spend up 13.2% in constant currencies. The improvement in EBIT margin was driven by sales growth and business mix, as well as by the achievement of operating efficiencies of over SFr1.5b through the Nestle Continuous Excellence programme.

Paul Bulcke, chief executive of Nestle.

During 2010, Nestle concluded acquisitions worth more than SFr5b, including Kraft’s frozen pizza business, Vitaflo (clinical nutrition products) and Waggin’ Train (dog snacks). Nestle invested SFr4.6b in its operations across the world with strong emphasis on emerging markets such as India, Indonesia, the Philippines, the Equatorial African Region and Poland.

Other highlights of the year included the creation of Nestle Health Science and the Nestle Institute of Health Sciences to pioneer a new industry between food and pharma, and the opening of a R&D Centre for biscuits in Chile. Nestle also completed its SFr25b three-year share buy-back programme and launched a new SFr10b programme.

“In 2010, we delivered another year of strong top and bottom line growth, outperforming the market. We increased investment in our brands, our operations and our people. We continued to drive efficiency and effectiveness in both developed and emerging markets while at the same time accelerating innovation, serving well over a billion consumers a day across the world,” comments Paul Bulcke, chief executive of Nestle.

He continues: “We are starting 2011 with continued momentum, well placed to face uncertainties ahead, including volatile raw material prices. We are therefore confident of achieving the Nestle Model in 2011 – organic growth between 5% and 6% and an EBIT margin improvement in constant currencies.”

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