Nestlé posts 2012 profit of SFr10.6 billion

Nestlé sees challenging environment for its business in 2013 Keystone

Profit at Nestlé, the world’s largest food company, rose 12 per cent to SFr10.6 billion ($12 billion) on demand for its main brands – including Nescafé soluble coffee, KitKat chocolate bars and Maggi soups – in emerging markets.

Sales reached SFr92.2 billion in 2012, up from SFr83.6 billion in 2011, driven by beverages, dairy products, pet food, and bottled waters such as San Pellegrino and Perrier, the Vevey-based company said Thursday.

Sales growth picked up again in the last quarter, also helped by demand for nutritional and health products, the company said. Last year Nestlé bought an infant nutrition business from Pfizer and started operation at its Nestlé Institute of Health Sciences in Lausanne.

Some of the company’s newer brands, including the coffee systems Nescafé Dolce Gusto and Nespresso, performed well last year. The business unit, which includes Nespresso, generated sales worth SFr13.9 billion, up 8.7 per cent, Nestlé said.

At the same time, it registered slower growth for some products, including prepared foods and cooking aids. Sales increased 1.8 per cent in Europe, the slowest rate of all geographic regions.

“This year was not a walk in the park,” said Chief Financial Officer Wan Ling Martello. The company said it expects another challenging year in 2013.

Horsemeat scandal

The results show that Nestlé managed to overcome tough economic conditions in the food and beverage market in 2012. Time will show how the industry will digest new challenges. Currently, it is grappling with the “horsegate” scandal.

The British unit of frozen foods group Findus started to recall beef lasagne last week when tests showed that it contained horsemeat instead of beef. The scandal has since implicated operators and middlemen in a host of European countries, also affecting Swiss retailer Coop, which confirmed Wednesday that one of its lasagnes contained horsemeat.

Nestlé, the owner of Findus between 1962 and 2000, sold the rights to the brand in most of Europe, but retained them in Switzerland. It said that its Swiss Findus products were only made from domestic beef. Chief Executive Officer Paul Bulcke confirmed Thursday that Nestlé is not directly affected by the current scandal.

“The scandal doesn’t affect our products directly,” Bulcke said at a press conference, “but it’s bad for the whole food and beverage industry. The whole industry is in question again because of this horsemeat scandal.”

Bulcke said that the company is currently thoroughly checking all its products to make sure that Nestlé products actually contain what their labels say they contain. According to Bulcke, the company is heavily investing in the traceability of its products, and is aware that its success relies on maintaining consumers’ trust.