Nestlé profit falls

Nestlé's net profit fell in 2003 Keystone

Profits at the Swiss food multinational, Nestlé, dropped 18 per cent last year to SFr6.21 billion ($4.99 billion) from SFr7.56 billion the year before.

The weakness of the dollar pushed overall sales down 1.3 per cent to SFr87.98 billion.

The Vevey-based group said on Thursday the results were in line with expectations.

The maker of Nescafe coffee, ice cream, chocolate and Perrier water said it had experienced a successful year with strong organic growth and improved margins.

Disregarding currency fluctuations, sales actually increased by 6.3 per cent, it said.

“Nestlé has delivered both a good, sustainable improvement in performance and an organic growth within our target range,” commented CEO Peter Brabeck.

“This is a strong performance in an adverse economic and political environment.

Analyst Veronique Adam at JP Morgan said the result was encouraging for the group.

“The fact the company managed to increase sales on a like-for-like basis in the fourth quarter makes it clearly a strong performer in the sector. It’s all mildly positive,” she said.

Patrik Schwendimann, an analyst at Zurich Cantonal Bank described the results as “unspectacular” and slightly below the bank’s expectations.

Optimism

Nestlé said it was looking forward to 2004 with “cautious optimism”.

“I am satisfied that the group is capable of continuing to deliver margin improvement, supported by our efficiency programmes and continued strong organic growth,” said Brabeck.

He added that Nestlé was in “an excellent position” to deliver strong results in 2004 and would continue to focus on profitability.

The group said all areas had delivered good growth, with Eastern Europe, Latin America, the emerging markets of Asia, Africa and the Middle East outpacing the group average.

The multinational is following a strategy designed to cut costs by SFr6 billion over the next two years. Most of the cost savings are expected to be realised in 2005 and 2006.

swissinfo with agencies

nestlé

The Swiss multinational reported an 18% drop in 2003 net profit to SFr6.21 billion ($4.99 billion).
Sales fell slightly, to SFr87.98, but adjusted for currency fluctuations, actually rose 6.3 per cent.
The group said all areas had experienced growth and the company was in a good position.