Nestlé makes record SFr8-billion profit

Nestlé's range brought in sales of SFr 91 billion last year. Nestlé

Swiss food giant Nestlé has reported a net profit of SFr7.995 billion ($6.1 billion) for 2005 – up 20.8 per cent on the previous year.

This increase was in line with expectations, as currency swings boosted the world’s largest food group’s sales by a total of 7.5 per cent.

The Vevey-based giant announced on Thursday that group sales rose to SFr91.075 billion, up an underlying 6.2 per cent from 2004.

Underlying sales is Nestlé’s benchmark that strips out currency movements and acquisitions, on which the company targets five to six per cent growth.

The multinational said it had achieved 2005 Ebita (Earnings Before Interest, Taxes and Amortisation of goodwill) of SFr11.720 billion, resulting in an all-time high operating margin of 12.9 per cent of sales.

Uncertainties

Nestlé said it also held that Ebita target for 2006 but added that there were some uncertainties.

“High crude oil prices will continue to mark energy and packaging costs and there is a clearly more volatile political situation in some parts of the world,” the KitKat maker said.

“Also, a negative outcome of the Doha [world trade talks] round might impact trade and the overall economic outlook.”

Currency swings – in particular a stronger dollar and Latin American currencies – helped Nestlé’s sales by 1.8 per cent this year, the first positive effect in five years.

Nestlé generates around half its sales in the Americas and in Asia, where margins are higher than in cutthroat Europe.

Sales of beverages and as ice cream products exceeded the average rate of the group, while chocolate, confectionary and biscuits were below average.

swissinfo with agencies

Key facts

Total sales – SFr91.07 billion (+7.5%)
Operating profit (Ebita) – SFr11.72 billion (+8.9%)
Net profit – SFr7.99 billion (+20.8%)

In brief

Nestlé was founded in 1866 by Henri Nestlé and is today the world’s biggest food and beverage company

The company employs around 247,000 people and has factories or operations in almost every country in the world.