Despite sluggish sales, Swiss food giant Nestlé’s profit climbs
Vevey-based food and beverage giant Nestlé saw its revenues decline last year under the impact of the strong franc and despite strong organic growth. Net profit nevertheless rose by 20.9% to CHF11.21 billion ($12.8 billion). An increase in the dividend is proposed, and the growth outlook for 2024 is moderate.
Adjusted operating profit (Ebit) stagnated (-0.3%) to CHF16.05 billion, for an associated margin of 17.3%, an improvement of 0.2 percentage points, the Swiss multinational company reported on Thursday. A one-off effect had weighed on Nestlé’s profitability in 2022.
Sales fell by 1.5% to CHF93 billion, weighed down by the strength of the Swiss currency. Exchange rates reduced revenues by 7.8%, while inflation almost offset this impact, as evidenced by a price effect of 7.5%, said the Nestlé press release. Organic sales growth reached 7.2%, while real internal growth was negative at -0.3%.
Geographic reach
Nestlé reported sales growth in most regions and product categories. In developed markets, organic growth was below the Group average of 6.4%. This indicator reached 7.3% in North America, 8.2% in Europe, 8.3% in the Asia, Oceania and Africa zone, 9.3% in Latin America and 4.2% in the Greater China region. For Nestlé Health Science, organic sales growth was a meagre 1.6%, compared with 5.3% for Nespresso.
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Purina petcare products once again underpinned sales of the food liner. Growth in coffee exceeded 5%, but failed to break the 10% barrier, as did the baby nutrition segment. The Kitkat chocolate bar brand buoyed confectionery sales, which rose by more than 5% but less than 10%.
Mineral water enjoyed similar growth, while Nestlé Health Science recorded a more modest increase.
Billions in share buy-backs
Quoted in the press release, CEO Mark Schneider points to a difficult consumer climate, marked by inflation. “We achieved strong organic growth and a solid improvement in margins thanks to increased investment in marketing and other areas of development,” said Schneider.
The Board of Directors is proposing to increase the dividend to CHF3 per share, compared with the CHF2.95 paid for 2022. The decision will be taken at the Annual General Meeting on April 18. Last year, Nestlé also bought back CHF5 billion worth of shares as part of a three-year programme costing CHF20 billion.
CEO Schneider also saw his remuneration rise significantly in 2023. He received a total of CHF11.2 million, up 9% on the previous year’s figure of CHF10.3 million.
Translated from German by DeepL/jdp
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