Nestlé beats 2010 expectations

Nestlé Reports Strong Net Profits Despite Rising Costs

Despite the rising costs of raw materials, Nestlé has reported net profits of €24.98bn, a substantial increase on 2009 figures.

Profits were boosted by the sale of a stake in eyecare specialist Alcon to healthcare firm Novartis for 24.5bn Swiss francs.

Sales Growth Driven by Emerging Markets

Overall sales grew by 6.2pc, driven primarily by strong demand in emerging markets. Organic growth for Food and Beverages was 5.7pc in the Americas, 3.7pc in Europe and 10.2pc in Asia, Oceania and Africa, while it was stood at 11.5pc in emerging markets.

Maintaining Growth Targets Amid Market Uncertainties

The company maintained it could reach its targets of between 5 and 6pc growth in 2011 despite the “uncertainties” of the food market and rising input costs.

“We saw a significant uptick in raw material prices in the second half,” acknowledged chief financial officer Jim Singh. “We expect 2.5 to 3bn Swiss francs additional input costs in 2011.”

Dividend Increase and Consumer Price Impact

The company, which makes and distributes Nespresso coffee caps, Kit Kat chocolate bars and Perrier water, among thousands of other products, did not state what effect these variables would have on the consumer prices.

The firm also said it would increase the dividend to shareholders from 1.60 to 1.85 Swiss francs per share.

Market Response

Nestle shares were up about 1.6pc this morning but fell back to 52.95 Swiss francs later in the day.