NESTLE SUFFERS PROFIT DECREASE AS COMMODITY COSTS CONTINUE TO RISE

February 18th, 2011

Profits at Nestlé’s food business fell significantly last year as rising commodity costs took their toll and the company relied on emerging markets for much of its growth in 2010.

The Kit Kat and Nescafé maker raised £15.9bn last year from the sale of its stake in eyecare specialist Alcon however, excluding this its profits dipped 7% to £6.3bn.

Like-for-like sales in food and beverages were up 3.7% in Europe and 5.7% in the Americas, while sales in emerging markets were up 11.5% over the year.

Nestle's KitKat bar

Total sales hit £71bn and Nestlé predicted growth rates of 5% to 6% for the year ahead.

Chief executive Paul Bulcke said 2010 was: “another year of strong top and bottom line growth.”

He made a point in pointing out increased investment in the company’s top brands and claimed Nestlé was well placed to cope with future market uncertainties created by damaging raw material prices.

Chief financial officer Jim Singh however, was more weary. He said:

“We saw a significant up-tick in raw material prices in the second half. I cannot tell you what the pricing will be.

“That depends on the different markets.”