Nestle 2010 profits soar on back of Alcon sale

17th February 2011, Comments 0 comments

The world's biggest food company Nestle said on Thursday its 2010 net profits more than trebled to 34.2 billion francs ($35.7 billion, 26.3 billion euros) on the sale of eyecare group Alcon.

The sale of its Alcon stake to Swiss health giant Novartis contributed 24.5 billion francs to Nestle's bottomline after the company reported 2009 earnings of 10.4 billion francs.

The Swiss-based group also issued a positive outlook for 2011, saying that it was starting the year with "continued momentum, well placed to face uncertainties ahead, including volatile raw material prices."

Nestle chief executive officer Paul Bulcke acknowledged that commodity prices were proving to be a "big challenge."

Referring to a political stalemate in Ivory Coast, the world's biggest cocoa producer and exporter, Bulcke said: "We hope that the political trouble will be quickly resolved in a peaceful manner.

"If the situation persists, we risk suffering ... dramatic consequences."

Sales generated by the food giant came to 104.6 billion francs, in line with analysts' expectations.

"In 2010, we delivered another year of strong top and bottom line growth, outperforming the market," said Bulcke, adding: "All over the world in all categories, the figures were good."

The Americas remained the group's biggest revenue generator, with 34.3 billion francs last year, up 5.9 percent in organic growth.

Petfood and chocolates sold well, said Nestle, but frozen prepared meals were weak.

In Europe, sales were up 2.5 percent to 21.6 billion francs while Asia, Oceania and Africa gained 8.7 percent 17.4 billion francs.

Nescafe proved to be a hit in Japan, with about half a million of coffee making machines sold.

The group proposed to cancel some 25 billion francs worth of shares bought back last year, as well as another 10 billion francs worth to be repurchased this year, a move that could strengthen share prices.

It also offered a 15.6 percent increase in dividend to 1.85 francs per share.

The group announced it was proposing to elect a new member, former UNICEF chief Ann Veneman, to its board.

Analysts were largely satisfied with the results.

Bank Helvea described them as a "convincing set of results, especially with a very strong top line growth."

Bank Vontobel also praised the group's sales growth, although it said it was disappointed that Nestle did not announce an additional shares buy-back given the high cash flow.

At midday, Nestle shares were up 0.86 percent at 52.90 francs, outperforming the overall Swiss Market Index, which was down 0.25 percent.

© 2011 AFP

0 Comments To This Article