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On The Case
Record result for Nestlé as full-year profits rise 22%
Date of publication - 23 February 2001
Nestlé, the world's biggest consumer food company, reported a 22 per cent rise in full-year earnings and said real internal sales growth had surpassed the company's long-running target of 4 per cent.
The company also announced details of a 10-for-one share split designed to improve liquidity of Nestlé shares, which rose about one per cent in morning trading to SFr3,584.
Net profit was SFr5.76bn ($3.41bn) against SFr4.7bn, in line with expectations. Sales rose 9 per cent to SFr81.4bn - driven by strong real internal growth of 4.4 per cent compared with 3.6 per cent last time.
Nestlé said fourth-quarter growth was five per cent, beating rivals Unilever and Danone and reflecting the company's decision to withdraw from slow-growing agribusinesses and move into the faster-growing field of nutrition and well-being products.
Profit margins improved from 6.3 per cent to 7.1 per cent. Net debt dropped to SFr3bn from SFr6.2bn, reflecting strong cash flow generation and tighter control of working capital.
Emerging markets including Eastern Europe, Asia and Latin America performed particularly well.
Nestlé attributed the buoyant results to efficiency improvements made in purchasing, supply chain management and the ongoing restructuring.
Peter Brabeck, chief executive, said: "Nestlé has achieved record levels of growth and profits. We are now harvesting the results of our relentless push for continuous improvement."
Last year, Mr Brabeck unveiled one of the largest reorganisation's in Nestlé's history. Called the Globe project, it was designed as the successor to Nestlé's MH 97 programme, which has reduced the cost base by SFr2.2bn over the past three years.
Mr Brabeck had little new information on Nestle's $33.50 per share offer for Ralston Purina, the US pet food group. He said Nestlé was in the process of filing its case with various regulators and awaiting approval of the deal from Ralston Purina shareholders.
Earnings per share rose 22.1 per cent from SFr122.1 to SFr149.1. The dividend was raised from SFr 43 to SFr55, an increase of 27.9 per cent.
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