Nestle reports profitable 2004
Nestle delivered strong 2004 results with net profit up 8.1 percent to CHF 6.7 billion, but sales were down.
On consolidated sales of CHF 86 769 million, the Nestlé Group achieved an EBITA (Earnings Before Interest, Taxes and Amortization of goodwill) of CHF 10 970 million, resulting in an all-time high margin of 12.6 percent of sales. Net profit amounted to CHF 6 717 million, a margin of 7.7 percent up from 7.1 percent in 2003, while earnings per share stood at CHF 17.29 over CHF 16.05 in 2003. Nestle noted that results were achieved in the face of higher prices for raw materials such as milk, coffee, sugar, energy and packaging materials, poor weather conditions, and a difficult business environment in western Europe.
Although constant currency sales increased by 2.1 percent in 2004, reported sales declined by 1.4 percent due to a negative 3.5 percent currency impact on the one hand and, on the other, to the level of divestitures which, at 3.6 percent of sales, outweighed that of acquisitions, at 1.2 percent. Real internal growth accelerated to 2.9 percent from 2.2 percent in 2003, which combined with a pricing increase of 1.6 percent, resulted in organic growth of 4.5 percent, which Nestle said was somewhat below the Group's long-term target but well above the industry average.
Nestle CEO Peter Brabeck was happy with the result, which came “under challenging circumstances.” He said that in particular businesses in the Americas and Asia, Oceania and Africa achieved well.
Brabeck revealed that the Board is proposing an 11 percent increase of the dividend and authorizes a share buyback program starting in the second half of 2005. “Looking ahead to 2005, I am confident that Nestlé will again increase its sales and EBITA margin in constant currencies, with organic growth within our trend target of between 5 and 6 percent,” Brabeck commented.
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