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NESTLÉ – Full-Year 2014: 4.5% Organic Growth, Trading Operating Profit Margin up 10 basis points, up 30 basis points in constant currencies

VEVEY, Switzerland – Nestlé SA on Thursday reported full-year results for 2014.

Executive summary:

  • Sales of CHF 91.6 billion
  • 4.5% organic growth and 2.3% real internal growth
  • Trading operating profit margin up 10 basis points to 15.3%, up 30 basis points in constant currencies
  • Underlying earnings per share up 4.4% in constant currencies
  • Strong operating cash flow at CHF 14.7 billion
  • Proposed dividend increased to CHF 2.20 per share
  • 2015 outlook: aim to achieve organic growth of around 5% with improvements in margins, underlying earnings per share in constant currencies and capital efficiency

Group results

In 2014 Nestlé’s organic growth was 4.5%, composed of 2.3% real internal growth and 2.2% pricing. Sales were CHF 91.6 billion, down 0.6%, impacted by negative foreign exchange of -5.5%. Acquisitions, net of divestitures, added 0.4% to sales.

  • The Group’s trading operating profit was CHF 14.0 billion, representing a margin of 15.3%, up 10 basis points, and up 30 basis points in constant currencies.
  • The cost of goods sold fell by 30 basis points as a percentage of sales, driven by product mix and pricing actions and savings created by Nestlé Continuous Excellence which more than offset increases in raw material costs.
  • Distribution costs were up by 10 basis points.
  • Total marketing and administration expenses rose by 10 basis points as we increased consumer facing marketing support for our brands.
  • Net profit rose CHF 4.4 billion to CHF 14.5 billion. The increase also reflects the profit realised on the disposal of part of the stake in L’Oréal and the revaluation gain on the 50% of Galderma already held when the Group brought its ownership from 50% to 100%. Reported earnings per share were CHF 4.54, up 44.6%.
  • Underlying earnings per share in constant currencies were up 4.4%.
  • The Group’s operating cash flow remained strong at CHF 14.7 billion.

Nespresso

Nespresso grew in all regions, further expanding its presence around the world. The focus on quality and investments in products, machines and services were the base for its strong results.

Nespresso continued to drive the expansion of the global single-serve coffee market with the successful launch of the VertuoLine system in North America creating a new premium coffee segment.

The roll-out of the innovative automated retail boutique, the Nespresso Cube, is pioneering a new way of shopping and a personalised service for consumers.

Paul Bulcke, Nestlé CEO: “These are strong results, building on the good growth of past years and delivered in a soft trading environment.

They demonstrate the intrinsic strengths of Nestlé: the commitment of our people, our global footprint, the strength of our portfolio and the quality of our innovation.

While delivering in the short term, we remain focused on our business long term, strengthening the foundations of future growth.

We expect 2015 to be similar to 2014 and we aim to achieve organic growth of around 5% with improvements in margins, underlying earnings per share in constant currencies and capital efficiency.”