Record result at Nestlé bodes well for future

Record performance is led from Nestlé headquarters in Vevey Keystone

The world's largest food concern, Nestlé, achieved record sales and earnings in 2000 and is predicting an even better result for this year.

Announcing its results on Friday from its headquarters in Vevey on Lake Geneva, Nestlé said net profit had jumped 22 per cent over the previous year to SFr5.763 billion ($3.41 billion).

Sales over the 12 months rose by 9.1 per cent to SFr81.422 billion, despite a 1.3 per cent net reduction from divestitures and acquisitions.

“Nestlé has achieved record levels of growth and profits. We are now harvesting the results of our relentless push for continuous improvement,” said chief executive, Peter Brabeck.

“The group’s business strategy is delivering sustainable, capital efficient and profitable long-term growth,” he added.

The board is proposing to shareholders that the dividend be raised from SFr43 to SFr55 per share, an increase of 27.9 per cent, representing a payout ratio of 36.9 per cent.

Analysts focused their attention on Nestlé’s internal sales figures. Patrick Hasenböhler, of Zürcher Kantonal Bank, described the figure of 4.4 per cent growth in internal sales as “extremely good…it’s the first time since 1991 that Nestlé has achieved its 4 per cent growth target.”

The Nestlé board is following other Swiss companies in taking advantage of new laws governing nominal share values, which are due to come into force in May.

Nestlé is proposing a 10-to-1 split of its shares to bring the nominal par value down from SFr10 to SFr1. It is also planning to adjust the ratio of American Depositary Receipts (ADRs) to the Nestlé share from 20:1 to 4:1.

In a statement, Nestlé said all three of its geographic zones exceeded their targets in 2000, with particularly strong performances in Eastern Europe, Asia, Latin America, as well as in its joint ventures.

It commented that portfolio streamlining, efficiency improvements in purchasing, supply chain management and on-going industrial restructuring led to a general increase in operational efficiency, which was reflected in the higher margins and profits.

At the same time, it added, significant investments were made in research and development, manufacturing and marketing to ensure future “top-line” growth.

In its outlook for 2001, Nestlé said that macroeconomic indicators showed no major problem areas and the company remained confident that it could continue to improve performance.

Barring major unforeseen events, Nestle would close 2001 with higher sales and profits than in 2000, it added.

swissinfo with agencies