Nestle Reports $10.2 Billion Annual Profit

Feb 16 2012 --- Nestle has posted a full-year net profit of 9.5 billion Swiss francs ($10.2 billion) that reflected stronger-than-expected sales growth of 7.5% - however, the company predicted a tough year ahead.

 

Analysts had predicted sales growth of about 7% as the world's biggest food and drink company grappled with volatile markets, rising commodity prices and the strength of the Swiss franc for dragging down profits.

 

The Swiss company reported that its earnings for 2011 reached 83.6 billion francs ($90.1 billion), a drop that was slightly less than expected from almost 110 billion francs ($118.3 billion) in 2010.

 

That was in part due to the Swiss central bank's intervention in the latter half of the year to weaken its safe-haven currency which had soared against the dollar and the euro over the summer, dragging down profits.

 

But 2011 net profit from the maker of Nescafe, Perrier, Jenny Craig and Haagen Dazs compares with a full-year 2010 profit of 34.23 billion Swiss francs ($36.8 billion) that was inflated by the sale of its stake in eye care company Alcon and added 24.5 billion francs ($26.3 billion) net to its balance sheet.

 

Chief executive Paul Bulcke said the sales growth rate is expected at between 5% and 6% in the coming year.

 

"We delivered good performance, top and bottom line, in both emerging and developed markets in 2011. It was a challenging year, and we do not expect 2012 to be any easier," he said.

 

Mr Bulcke cited new partnerships in China and a huge new research centre in Lausanne, Switzerland, as helping Nestle get off to "a good start" this year.

 

With 280,000 employees worldwide and factories or operations in almost every country in the world, Nestle is a major buyer of food commodities such as wheat, sugar, milk and coffee and its results are a good indicator of consumer demand and the health of the global economy as a whole.

 

The company achieved growth in both North America and Latin America.

 

In North America most of their businesses contributed to the positive performance despite subdued consumer confidence. Pizza strengthened its lead over its competitors with a good performance by DiGiorno. Ice cream saw growth in snacks, Häagen-Dazs and Skinny Cow. The extension of the Skinny Cow brand into the chocolate category helped to drive growth there. Soluble coffee achieved good growth with Taster's Choice and Nescafé Clásico. 

 

Coffee-mate benefited from the successful launch of Natural Bliss. The frozen segment continued to be challenging but Lean Cuisine held share. Petcare built on its leading market position with strong growth from Purina ONE Beyond and Dog Chow, and achieved share gains in all categories and channels.

 

Nestlé's presence in the Middles East and Asia is deep-rooted, demonstrated by four 100 year anniversaries: Turkey in 2009, Philippines in 2011, and Malaysia and India in 2012.

 

Emerging markets produced double-digit growth. The highlights included China, India, Pakistan, North Africa, Central West Africa despite the conflict in Côte d'Ivoire, and Egypt in spite of the turmoil endured for much of the year. In a volatile environment Nestle remained focused on deepening distribution, aiming to service an additional one million small retail outlets between 2010 and 2012. They invested in line extensions and new factories in a number of regions. They also established promising partnerships in China with Yinlu and Hsu Fu Chi.