Nestle 2010 Profits Soar

Profits hit $35.7 billion

The world's biggest food company Nestle said on Feb. 17 its 2010 net profits more than trebled to 34.2 billion francs (US$35.7 billion) on the sale of eyecare group Alcon.

The sale of its Alcon stake to Swiss health giant Novartis contributed 24.5 billion francs to Nestle's bottomline after the company reported 2009 earnings of 10.4 billion francs.

Sales generated by the food giant came to 104.6 billion francs.

"In 2010, we delivered another year of strong top and bottom line growth, outperforming the market," said Bulcke, adding: "All over the world in all categories, the figures were good."

The Americas remained the group's biggest revenue generator, with 34.3 billion francs last year, up 5.9% in organic growth.

Pet food and chocolates sold well, said Nestle, but frozen prepared meals were weak.

In Europe, sales were up 2.5% to 21.6 billion francs while Asia, Oceania and Africa gained 8.7% to 17.4 billion francs.

Nescafe proved to be a hit in Japan, with about half a million of coffee making machines sold. The maker of Nespresso capsules also expressed confidence about staying at the top of the coffee capsule market despite growing competition.

Sara Lee and French group Casino are among companies seeking a slice of the coffee capsule market, saying that they are able to get around the patents owned by Nestle. But Bulcke said: "The competition does not frighten us."

The Swiss group sold some 3 billion francs worth of Nespresso capsules in 2010, an organic growth of over 20%. "Just four years after its launch, Dolce Gusto has generated half a billion in revenues," said Bulcke, referring to a line of capsule coffee makers. To consolidate its place as market leader, the group is counting on a growing number of specialized boutiques. There were already 215 such shops by the end of 2010, with the latest opened in Santiago, Chile. But by the end of 2011, Nestle expects to have 250 boutiques, including a new one in Shanghai.

The Swiss-based group also issued a positive outlook for 2011, saying that it was starting the year with "continued momentum, well placed to face uncertainties ahead, including volatile raw material prices."

Nestle CEO Paul Bulcke acknowledged that commodity prices were proving to be a "big challenge."

Referring to a political stalemate in Ivory Coast, the world's biggest cocoa producer and exporter, Bulcke said: "We hope that the political trouble will be quickly resolved in a peaceful manner. If the situation persists, we risk suffering ... dramatic consequences."

Meanwhile, the group proposed to cancel some 25 billion francs worth of shares bought back last year, as well as another 10 billion francs worth to be repurchased this year, a move that could strengthen share prices. It also offered a 15.6% increase in dividend to 1.85 francs per share.

Copyright Agence France-Presse, 2011

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