Nestlé Group in 2003: Successful Year with Strong Organic Growth and Improved Margins

 

Highlights	FY 2003	FY 2002
Sales Constant currency sales	CHF  xxxxxx mio +xxx%	CHF xx'xxx mio
EBITA Constant currency EBITA margin	CHF  xx'xxx mio +xx basis points	CHF   xx'xxx mio
Net profit	CHF    x'xxx mio	CHF    x'xxx mio
Underlying EPS	CHF    xx.xx	CHF  xx.xx
Dividend Proposal	CHF     x.xx	CHF    x.xx

 

 

        Constant currency sales up xxx percent

        Foreign exchange reduces sales by xxx percent

        xxx percent organic growth - within target range

        EBITA margin in Swiss francs up xx basis points to record xxxx percent

        In constant currencies, margin increases xx basis points, demonstrating sustain­able operating improvement

        Operating cash flow of CHF xxx billion, near all-time high; free cash flow up xxx percent to record CHF xxxx million

 

 

 

Vevey, February 26, 2004  -  On consolidated sales of CHF xxx million, the Nestlé Group achieved EBITA (Earnings Before Interest, Taxes and Amortization of goodwill) of CHF xxx mil­lion, resulting in an all-time high margin of xxx percent of sales. Net profit amounted to CHF xxx million, a margin of xxx percent, whilst earnings per share were CHF xxx ; because of one-off fac­tors in 2002, these figures are not comparable. The comparable figures show that the underlying net profit margin increased xxx basis points from xxx to xxx percent, whilst the underlying earnings per share increased xxx percent from CHF xxx to CHF xxx.

 

In US dollars, the Group would have grown sales by xxx percent to USD xxx billion (USD xxx bil­lion in 2002) and increased EBITA xxx percent from USD xxx billion to USD xxx billion.

 

 

At constant currencies, Group sales grew xxx percent. The xxx  percent organic growth was within the target range. Pricing contributed xxx percent and real internal growth xxx percent. This reflects Nestlé's declared policy of favoring margins over volume in a period that saw higher raw material costs and weaker US dollar related currencies. All Zones saw positive organic growth rates. Eastern Europe, Latin America, the emerging markets of Asia as well as Africa and the Middle East clearly outpaced the Group average, as did Nestlé Waters, the joint ventures and the pharmaceutical sec­tor. The USA and Canada look back on a very successful year and China, India and Indochina also performed well. Alcon's sales increased xxx percent to USD xxx billion.

 

Soluble coffee, chilled culinary, nutrition, ice cream, chocolate, and breakfast cereals delivered good organic growth.

 

The strong Swiss franc had a negative impact of xxx percent on the Group's consolidated sales. Acquisitions net of divestments contributed xxx percent to reported sales.

 

 

The Group's EBITA amounts to CHF xxx million, resulting in a margin of xxx percent (xxx per­cent in 2002). Nestlé achieved its objective of continuous, sustainable margin improvement despite the foreign exchange impact. At constant currencies EBITA increased over xxx percent with a margin improvement of xxx basis points to xxx percent.

 

All three geographic Zones contributed to the improvement in Swiss franc EBITA margins, with par­ticularly strong advances in the Americas and in the water business. In the product groups, pet care made significant progress with an increase of xxx basis points in EBITA margin, reflecting the posi­tive effect of the integration of Purina. Prepared dishes and cooking aids improved by xxx basis points, buoyed by the success of the recently acquired Chef America. There were good improve­ments also in ice cream and chilled dairy, amongst others.

 

Net profit amounts to CHF xxx million (CHF xxx million in 2002, strongly influenced by one-off factors such as the Alcon partial IPO, the FIS divestiture and charges relating to restructuring and impairments) and earnings per share to CHF xxx (CHF xxx in 2002). The underlying net profit, stripping out results on disposal, significant one-time benefits and charges, amortization, impairment and restructuring costs, increased to CHF xxx billion, resulting in underlying earnings per share of CHF xxx, an increase of xxx percent.

 

Operating cash flow reached CHF xxx million, with a free cash flow of CHF xxx million, which corresponds to a record xxx percent of sales. These figures represent a good performance in the context of the xxx percent negative foreign exchange impact on sales.

 

The Group reduced its net debt (total financial liabilities net of liquid assets) slightly to CHF xxx bil­lion and, although its average net debt was higher than in 2002, it also reduced its net financing cost. The Group's net debt / equity ratio improved to xxx percent from xxx percent in 2002, strengthening its AAA credit rating. Capital expenditure fell to CHF xxx million, or xxx percent of sales. Return on invested capital, excluding goodwill, rose from xxx percent to xxx percent.

 

 

After successfully coming through a challenging year, the Group looks forward to 2004 with cautious optimism. It will pursue its policy of bringing continuous, sustainable improvement to its margins and it maintains its objective of achieving between xxx and xxx percent organic sales growth. As a result of the growing contribution of the efficiency programs and on the strength of its popular brands and broad presence, Nestlé is confident on being able to deliver on both fronts.

 

 

At its meeting of February 25, 2004 the Board of Directors approved the fully audited accounts and decided to propose to the General Meeting of Shareholders a further increase in dividend to CHF xxx per share (CHF xxx for 2002). Provided the General Meeting accepts this proposal, the dividend will be payable on April 28, 2004.

 

At the General Meeting, the terms as directors of Mrs. Vreni Spoerry, Lord Simpson and Mr. Arthur Dunkel will expire. These directors are not seeking re-election. The Board expresses its gratefulness to the retiring members for their contribution and the leadership, knowledge and experience they brought to the Company. It recommends the General Meeting to elect Sir Edward George, Mr. Kaspar Villiger, Mr. Rolf Hänggi, Mr. Daniel Borel and Mrs. Carolina Müller-Möhl as new directors.

 

The General Meeting of Nestlé S.A. will take place on April 22, 2004 at 15:00 at the Palais de Beau­lieu in Lausanne. No transfer of shares affecting voting rights will be registered between April 2nd, 2004 and the day of the General Meeting. The management report will be available from March 25, 2004, whereas the fully audited financial statements are displayed as of today on the Nestlé Corpo­rate Website (www.nestle.com) and on the Investor Relations website (www.ir.nestle.com)

 

 

 

 

 

 

 

 

 

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