Nestlé group has announced its financial results for the year ended 2005, posting record sales and profits for the year under review. Reported sales amount to a new high of more than 91 billion Swiss francs, up 7.5 per cent.
The single most important factor in this increase is the strong real internal growth of 4.2 per cent which, with pricing of two per cent, creates organic growth of 6.2 per cent, clearly above market growth. For the first time in five years, many of the group's key trading currencies appreciated against the Swiss franc, resulting in a positive contribution to consolidated sales in Swiss francs of 1.8 per cent. Divestments outweighed acquisitions by 0.5 per cent and slightly reduced sales.With 11,720 million Swiss francs, the group's EBITA improved by 8.9 per cent and now stands at 12.9 per cent of sales, an improvement of 20 basis points. Despite rising input costs and some unforeseen one-off costs such as the product exchange in China, Nestlé was able to grow margins because of its strong top-line growth and the good results yielded by the cost saving initiatives, Operation Excellence 2007 and Project FitNes and a strong performance by Alcon.
Peter Brabeck-Letmathe, Nestlé group chairman and CEO said: "The 2005 results demonstrate the strength of the Nestlé model. We have outperformed the market in growth and have again delivered an improvement in EBITA margin. This performance reflects the power of our brands, the quality of our innovation and the benefits of our efficiency programs". He said the enhanced dividend proposal and the share buy-back demonstrate Nestlé's commitment to creating long-term, sustainable value for the shareholders. For 2006, he expects organic growth of between five and six per cent, as well as a continued improvement of the EBITA margin in constant currencies.
As a result of its strong savings focus, Nestlé was able to absorb the increased cost of equity based remuneration, as well as the significantly increased energy and raw material costs. Cost of goods sold, at 41.7 per cent of sales, and distribution costs therefore remained stable, whereas continued efficiency measures even drove marketing and administration expenses down 10 basis points as a percentage of sales. The group spent 1.5 billion Swiss francs(1.6 per cent of sales) on research and development.
Net profit reached a record CHF 7 995 million Swiss francs, up 20.7 per cent or 8.8 per cent of sales. Earnings per share were up 21.3 per cent, amounting to 20 million Swiss francs. The strong performance in 2005 enables the board to propose a dividend increase of 12.5 per cent to nine Swiss francs per share.
"The above results reflect the positive outlook of Nestlé Group and this provides the sound backing for Nestlé's local operations," commented Giorgio Mondoví, managing director of Nestlé Malta.
"Registered growth both in sales and in earnings before interest, tax and amortisation for Malta were in line with that of the international company with the main growth in Malta being registered mostly in the cereals and coffee categories."
Nestlé Malta's turnover for 2005 was the highest turnover ever achieved by the company since it started operating in Malta and profits improved by 110 basis points, said Mr Mondoví.