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Nestle Still In Troubled Waters


Bottled water continued to be the blackspot in Nestle sales in 2009, as the group reported a slide in net profits for the year.

Net profits for the 12 months of 2009 fell by more than 40% to CHF10.4bn (US$9.6bn), compared to CHF18bn in 2008, Nestle reported today (19 February).

But, the firm said that the results are not directly comparable because 2008 profits were bolstered by a CHF9.2bn gain on its disposal of a 25% stake in Alcon. Underlying earnings per share in 2009 rose by nearly 10% to CHF3.09, Nestle added.

Net sales for 2009 fell to CHF107.6bn from CHF109.9bn a year earlier, largely impacted by unfavourable foreign currency. When stripped out, Nestle said that the 2009 figure represented 4% like-for-like sales growth.

Bottled water was the only Nestle business division that did not report a rise in like-for-like sales in 2009.

Nestle Waters reported organic sales down 1.4% to CHF9bn, which follows on from a 1.6% decline for the business in 2008.

Nestle conceded that mature western markets remain weak for water sales, but added that it saw a pick-up in organic sales in Europe and North America in the fourth quarter.

Emerging markets reported double-digit bottled water sales growth, while the Nestle Pure Life brand also reported double-digit growth.

“We substantially increased the EBIT margin of the segment thanks to supply chain efficiencies and lower input costs,” said the group.

Bottled water EBIT margin rose by 7% for the year, lagging behind double-digit rises in other business divisions.

“For 2010, I expect our food and beverages business to achieve higher organic growth than in 2009 and a further EBIT margin increase in constant currencies,” said Nestle CEO Paul Bulcke. He did not mention the water business.

The group proposed increasing its full-year dividend by 14% to CHF1.6 per share. It also plans to buy back 10bn shares in 2010.

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Saturday, November 25, 2:07 am

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