Nestlé profit rises despite slight drop in sales
Swiss food giant Nestlé has reported a net profit of SFr6.72 billion ($5.78 billion ) for 2004 – up 8.1 per cent on the previous year.
But sales revenue fell to SFr86.77 billion from nearly SFr88 billion in 2003, weighed down by flagging demand in Europe and a weak dollar.
Announcing the figures on Thursday, Nestlé said it would launch a SFr1 billion share buyback programme later this year.
The world’s largest food company said there could be more buybacks to come as organic growth for 2004 rose 4.5 per cent and margins began to improve.
It added that its ability to generate strong cashflow and its top-level credit rating allowed it to become more flexible with its capital structure.
“The group has shown that it can deliver strong growth and better profitability even under challenging circumstances,” said chief executive Peter Brabeck in a statement.
“In particular, our businesses in the Americas and Asia, Oceania and Africa, together with Alcon [eyecare products], have achieved outstanding growth and strong profit performances.”
All-time high
The multinational said it had achieved an EBITA (Earnings Before Interest, Taxes and Amortisation of goodwill) of SFr11 billion, resulting in an all-time high operating margin of 12.6 per cent of sales.
Brabeck predicted that the company, which makes world-known brands including Nescafé instant coffee and Perrier mineral water, would increase its sales in 2005 and see organic growth of between five and six per cent.
Profits at the Vevey-based food giant dropped 18 per cent in 2003 to SFr6.21 billion from SFr7.56 billion the year before.
Last month Nestlé announced that Brabeck would tighten his grip on the multinational’s strategic leadership, taking on the additional role of chairman.
The company said Brabeck would replace Rainer Gut, who is to step down at the annual shareholders meeting on April 14.
swissinfo with agencies
Founded in 1866, Nestlé is the world’s biggest food concern and the largest industrial enterprise in Switzerland.
The company has its headquarters in Vevey.
Nestlé operates 511 factories and employs 253,000 workers.
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