Food giant Nestlé has reported a 20.7% rise in net profit for 2005 to CHF8bn (US$6.134bn), on sales up 7.5% at CHF91.1bn.
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The company said that organic growth of 6.2% (4.2% internal growth and 2% pricing) was ahead of market growth. Group EBITA rose by 8.9% to CHF11.72bn and now stands at 12.9% of sales, an improvement of 20 basis points. Earnings per share increased by 21.3% to CHF20.58 while underlying net earnings per share grew by 12.9% to CHF 21.25.
Nestlé said operating cash flow stood at CHF10.2bn while group net debt had declined slightly during the year, from CHF10.2bn to CHF9.6bn.
“The 2005 results demonstrate the strength of the Nestlé Model,” said chairman and CEO Peter Brabeck-Letmathe. “We have outperformed the market in growth and have again delivered an improvement in EBITA margin. This performance reflects the power of our brands, the quality of our innovation and the benefits of our efficiency programmes. The enhanced dividend proposal and the share buy-back demonstrate Nestlé’s commitment to creating long-term, sustainable value for our shareholders. For 2006, I expect organic growth of between 5% and 6%, as well as a continued improvement of the EBITA margin in constant currencies.”
On a regional basis, Nestlé said the consumer environment in Europe, where it achieved 2% organic growth, with sales of CHF27.6bn, remained “subdued”. Organic growth of over 1.5% in France and over 3% in the UK reflected share gains in categories such as soluble coffee and frozen food, the company said.
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By GlobalDataThe company recorded 7.8% organic growth in the Americas region on the back of strong consumer demand and good performances from all key markets. North America reported 7% organic growth, Mexico 10.1% and Brazil 5.4%. In North America, the company said it gained market share in frozen food, water and ice cream, amongst other categories. Nestlé said the Americas region saw good EBITA margin performance due to its strong growth and cost focus.
The Asia, Oceania and Africa division recorded organic growth of 6.6% with a particularly strong performance from emerging markets. Organic growth from South Asia reached 13.9%, while the Middle East achieved organic growth of 13.0%, and Africa 9.1%.
Milk products, nutrition and ice cream enjoyed 6.7% organic growth. Several launches of affordable milk, with nutritional benefits, including Nestlé Ideal in Brazil, drove growth in shelf stable dairy’s emerging market businesses, whilst CoffeeMate achieved dynamic growth in the US.
In ice cream, Nestlé said it achieved notable market share gains in North America, where there was strong growth from Dreyer’s Slow Churned, as well as new launches such as Häagen-Dazs Light and Dibs.
Cereal Partners Worldwide, the breakfast cereal joint-venture with General Mills, enjoyed good top-and bottom-line growth in 2005 and exceeded CHF two billion in sales for the first time, the company said.
Prepared dishes and cooking aids saw 4.4% organic growth, while frozen food, one of Nestlé’s biggest businesses in the US, performed well due in part to new launches including Stouffer’s Corner Bistro.
The group reported organic growth of 2.6% from chocolate, confectionery and biscuits and said it had been held back in this sector by issues in its UK and Russian businesses, but that elsewhere, there were good performances, with chocolate performing well in Japan, Canada, Australia and some emerging markets. Confectionery, in particular the Wonka brand, had performed well in the US, its biggest market, the company said.
