The Nestlé Group’s consolidated sales for 2001 amounted to SFr84.698bn (2000: 81.422bn), an increase of 4% over the preceding year. Trading profit reached SFr9.218bn, resulting in a margin of 10.9% of sales. This is despite the effect of the trade spend initiative as well as the initial costs of the GLOBE project. EBITA (Earnings Before Interest, Taxes and Amortization) improved to SFr9.713bn. Net profit was up 15.9% to SFr6.681bn, setting a new net margin record of 7.9%. Earnings per share increased by 15.7%, from SFr14.91 to SFr17.25.
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With an RIG of 4.4%, the group outperformed its annual growth trend target of 4%. Most areas and activities contributed to RIG. The group recorded particularly strong progress in Eastern Europe, especially in Russia, as well as in much of Asia. China, India and the Indochina region reached double-digit growth rates, as did some areas in Africa, as well as water in the USA and in Germany. Alcon had an excellent year and the joint-ventures also grew well above group average.
Sales growth of 9.7% at comparable structure and constant exchanges rates, incorporating organic growth of 6.4%, resulted in consolidated sales growth of 4% in Swiss francs. The key driver of this positive development was the strong RIG of 4.4%, while pricing and other factors contributed another 5.3%. The strengthening of the Swiss franc had a negative effect of 4.7% and divestitures net of acquisitions reduced sales by 1%.
The Ralston Purina acquisition was concluded in mid-December and therefore had no material impact on 2001 results. Its financing, as well as that of other acquisitions in water and in the ice cream sector, increased the Group’s net debt to SFr19.4bn (SFr3.0bn at the end of 2000). In view of the very healthy cash flow generation of SFr8.614bn (SFr8.851bn in 2000), the group’s financial situation remains comfortable, as demonstrated by its AAA debt rating.
In 2001 Nestlé enhanced its business platform for achieving healthy and sustainable growth and performance by
· moving forward with its worldwide GLOBE project
· successfully concluding its MH97 program with an additional saving of SFr900m in 2001, bringing the total savings to SFr4bn
· launching three new initiatives in the area of production, trade spend and white collar productivity, and
· continuing its program of divesting non-core or under-performing businesses.
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By GlobalDataFurthermore, major efforts were undertaken to strengthen the market position of Nestlé’s strategic brands and product lines and to extend the availability of Nestlé products to consumers everywhere. Strategically important acquisitions like Ralston Purina, sole ownership of Ice Cream Partners USA and the purchase of Schoeller Holding, as well as several key acquisitions in water demonstrate the group’s determination and capacity to broaden its activities in key areas.
In this context, Nestlé announces the purchase of Brazilian chocolate and confectionery manufacturer Garoto S/A in Vila Velha in the State of Espirito Santo. The company operates two plants with a staff of over 2500 people and generates yearly sales of slightly more than CHF 310 million. This acquisitions strengthens Nestlé’s position on the chocolate market in northern Brazil and gives it access to a complementary range of products.
Barring major unforeseen events, Nestlé expects the current year to deliver a continued positive trend for its business. Economic indicators point to an overall acceleration in North America as well as in parts of Europe. Latin America, some isolated areas excepted, appears to be making progress, whilst the economic situation in most of Asia is satisfactory. The Company therefore expects to progress both in sales and profits during 2002.
At its meeting of 27 February 2002, the Board of Directors approved the fully audited accounts and decided to propose to the General Meeting of Shareholders that the dividend be raised from SFr5.50 (adjusted for the share split) to SFr6.40, an increase of 16.4%, representing a payout ratio of 37.1%. Assuming the General Meeting accepts this proposal, the dividend will be payable on 17 April 2002.
At the General Meeting the terms as directors of Mrs Vreni Spoerry and Mr Peter Brabeck-Letmathe will expire. Spoerry will present herself for re-election for a period of two years, while Brabeck is standing for another full five-year term. The Board recommends to the General Meeting to elect Professor Vernon Young, Professor of Nutritional Biochemistry at the Massachusetts Institute of Technology in Boston/Cambridge, USA, as a new director.
