Nestle SA predicts 2014 a challenging year

Nestle SA, the world's leading food industry group, has predicted 2014 another challenging year, but said it would be disciplined in driving performance in line with the company’s model of profitable growth and resource efficiency.

The year 2013 was equally challenging, causing its net profit to shrink by two percent, its net profit was at 10 billion Swiss francs (USD 11.2 billion), down from 10.2 billion a year earlier.

Mr Paul Bulcke Chief Executive Officer of Nestle, said this when he presented the company’s 2013 full year report in Vevey, Switzerland in a video conferencing here in Nestle Ghana's office.

“I therefore expect our 2014 performance to be similar to last year and again weighted to the second half, outperforming the market, with growth around five per cent and improvements in margins, underlying earnings percent share in constant currencies and capital efficiency”.

He disclosed that Nestlé’s sales increased by 2.7 percent to CHF 92.2 billion, which impacted by negative foreign exchange of 3.7 percent whilst organic growth was 4.6 per cent, composed of 3.1 per cent real internal growth and 1.5 per cent pricing.

Nestle Continuous Excellence was again delivered more than CHF 1.5 billion in efficiencies in all areas of business. This together with reduced structural costs, enabled Nestle to increase its brand support to absorb higher restructuring costs.

Mr Bulcke noted that the macro-environment in 2013 was one of soft growth, minimal in the developed world and below recent levels in the emerging markets. “Nestle saw its sales figure swelling from 2.7 per cent to CHF 92.2 billion, though the negative impact of exchange rates had sliced 3.7 per cent out of its sales figure.

Nestle Waters delivered growth in all three geographies-Asia, Oceanic and Africa despite intense pricing pressure in the United States and Europe. Most categories-ambient diary, cocoa and malt beverages in the Asia, Oceania and Africa zone grew double-digit with Milo being a highlight. Ambient culinary and chocolate also enjoyed high-digit growth, whilst the zone recorded high level of innovation.

For nutrition, infant nutrition business enhanced by the Wyeth Nutrition acquisition had a very positive year with more emphasis on infant formula and infant cereals. The US benefited from continued roll-out of innovations to help prevent colic and allergies, strengthening the Gerber brand franchise with many of the largest brands being Cerelac, Nestle NAN, S-26 and Illuma grew double-digit.

Nespresso continued to perform strongly globally but grew more in its core European markets and accelerated in the Americas, supported by new Grands Crus coffee and continuous innovation in machines and services as well as increasing brand awareness and continued geographic expansion with 48 boutique openings in 2013.

Nestle Health Science continued in its ambition to offer nutritional solutions that address disease and health conditions. Furthermore, CEO Bulcke said, performance in 2014 was expected "to be similar to last year," of about five per cent- at the low end of Nestle's standing target of achieving between five and six percent organic growth each year.

He said the long-term strategic direction was to be the leader in nutrition, health and wellness. We reinforced this strategy with the creation of Nestle Health Science, and “we are extending it now to the field of specialized medical skin treatments by setting up Nestle Skin Health SA”.