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Nestle Profit Shrinks 2% in 2013

Feb. 13, 2014
CEO Paul Bulcke said sales were minimal in the developed world and below recent levels in the emerging markets.

VEVEY -- Blaming a soft economic environment, the world's leading food industry group Nestle (IW 1000/37) said Thursday its net profit shrank 2% in 2013.  The company also cautioned that 2014 will be difficult.

"Last year was challenging and 2014 will likely be the same," Nestle chief executive Paul Bulcke acknowledged in the earnings statement.

In 2013, the Swiss company saw its net profit tick in at 10 billion Swiss francs (US$11.2 billion), down from 10.2 billion a year earlier.

The figure was below the expectations of analysts polled by financial news agency AWP, who on average had anticipated the group to rake in 10.6 billion Swiss francs in 2013.

Nestle meanwhile saw its sales figure swell 2.7% to 92.2 billion francs, the company said, stressing though that the negative impact of exchange rates had sliced 3.7% out of its sales figure.

The maker of Nespresso capsules and baby food, among many other things, said it had recorded organic growth, which does not count currency fluctuations or acquisitions, of 4.6%.

"The macro-environment in 2013 was one of soft growth, minimal in the developed world and below recent levels in the emerging markets," Bulcke pointed out.

The group saw its growth slow compared to 2012 to just 1% in developed countries, where sales stood at 51.4 billion francs last year, and to 9.3% in emerging economies, where it booked 40.8 billion in sales.

Going forward, Bulcke said performance in 2014 was expected "to be similar to last year," of about five percent -- at the low end of Nestle's standing target of achieving between five and six percent organic growth each year.

Bulcke acknowledged to reporters that it was "not realistic" to expect more than five percent growth at a time when the market was facing such difficult economic conditions.

"We never had an environment like that in 20 years. We can all dream but we need to be realistic," he said.

He nonetheless said he expected to see improvements in Nestle's margins and earnings per share in constant currencies, as well as in its capital efficiency.

The Nestle board meanwhile proposed dishing out a dividend of 2.15 Swiss francs per share, up from 2.05 francs a year earlier.

-Nathalie Olof-Ors, AFP

Copyright Agence France-Presse, 2014

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