Nestle Delivers Sterling Results For 2013

Swiss global nutrition, health and wellness company, Nestle, has reported impressive results for 2013, recording 92.2 billion Swiss Franc (approximately US$103.18 billion) in global sales.

This represents 2.7 per cent growth over the previous year’s figure, in spite of challenges in its operational zones.

The company, which operates 465 factories in 86 countries with products distributed across the world, also reported group trading operating profit of CHF14 billion, representing a margin of 15.2 per cent, up 0.20 per cent over the previous year’s figure.

The group’s operations in Asia, Oceania and Africa grew organically by 7.4 per cent, outpaced growth in all other zones, against 5.1 per cent in the Americas and 0.8 per cent in Europe.

Nestle’s business in developed markets also grew by 1.0 per cent, reaching sales worth CHF 51.4 billion as against the 9.3 per cent growth in emerging markets which delivered sales of CHF 40.8 billion.

The group results were jointly announced at a news conference in Vevey, Switzerland, by the Group Chief Executive, Mr Paul Bulcke, and Ms Wan Ling Martello, the Executive Vice President and Chief Financial Officer.

Nestle has had long-term operations in Ghana with a factory in Tema and a wide range of products which are household names, such as Milo, Nido, Maggi, Cerelac and chocolate products such as KitKat.

Ghana also hosts Nestle’s Central and West Africa office with over 400 employees.

The two executives explained that net profit was CHF10.0 billion, down slightly due to the costs of portfolio restructuring and the currency impact. Negative foreign exchange impacted the company’s sales revenue by 3.7 per cent.

However, the company’s programme, dubbed: ‘Nestlé Continuous Excellence,’ which aims at efficiency and cost-reducing operations, helped the group to save CHF1.5 billion (about US$1.6 billion) in all areas of the business.

The company measures its growth from two sources, namely organic growth (OG) and real internal growth (RIG). OG represents growth in volume and value and RIG represents growth in the volume of sales.

Thus, Nestle reduced marketing, distribution and administration costs significantly and increased its headline numbers with organic growth (growth in volume and value) of 4.6 per cent and real internal growth (growth in volume) of 3.1 per cent.

Mr Bulcke and Ms Martello said sales in the group’s Asia, Oceania and Africa zone grew by over 10 per cent to CHF 18.9 billion (5.6% organic growth, 4.8% real internal growth).

“The Zone’s real internal growth outpaced the market with strong performances particularly in Africa, the Middle East, Indonesia and Malaysia. Also noteworthy was Japan where a focus on innovative products and business models delivered good growth in the long-standing subdued trading environment,” the CEO said.

Mr Bulcke added that: “pricing in the zone reflected our commitment to remain competitive in the face of relatively low inflation.”

They explained that in Central and West Africa, the company continued the ???roll-out the new Nido Nutripack and fortified Maggi products and in Egypt Dolceca ice cream.

The chief executive acknowledged the impact of the challenging world economic environment but said the company managed to put strategies in place to mitigate the effects.

“External events in different parts of the zone were challenging. Nonetheless our effective portfolio management and increased efficiencies helped mitigate the effects and allowed us to increase brand support driving strong real internal growth and market share gains,” Mr Bulcke said.

For the outlook, the chief executive said the company expected to repeat its performance for this year amid similar challenges.

“Last year was challenging and 2014 will likely be the same. We will continue to be disciplined in driving our performance in line with the Nestle model of profitable growth and resource efficiency,” Mr Bulcke stated.