The bigger they are, the harder they fall. Well, not exactly, at least not in the case of the world's biggest food company, Nestlé. The Swiss company keeps going from strength to strength, and last year posted record sales, EBITA and net profit in Swiss franc terms, despite increasing global economic uncertainty.
Sales for the year rose 5.3 per cent to SF89.2 billion, while EBITA was ahead 9.5 per cent to SF10.9 billion. Net profits for the year increased 13.2 per cent to SF7.6 billion. At constant exchange rates, the increases were even more impressive: sales up 13 per cent, EBITA up 19 per cent and net profit up 19 per cent.
Peter Brabeck, CEO of Nestlé, was clearly delighted with the performance. "Nestlé did well in 2002. Achieving record levels in sales, EBITA, net profit, and cash flow in Swiss francs in a period of currency headwinds, economic downturns and political uncertainty shows that we are on the right track. We have continued to improve performance, we have pursued our future-oriented investments and have seen new R&D-driven sectors become significant businesses.
"We have also made strategic acquisitions as well as divestments, and have been able to improve Nestlé's position at the head of the food industry. In spite of political and economic turbulence and the continued strength of the Swiss franc, I am confident that in 2003 Nestle will be able to further improve its performance."
In organic terms, sales growth was 4.9 per cent, of which 1.5 per cent came from price increases, which Brabeck said reflected the strength of the group's brands. "All zones contributed to growth and a number of key markets showed excellent results," he said. "Highlights in the Americas were the USA and Canada, as well as Brazil, which recorded growth above the level achieved in 2001. In countries such as Japan, Mexico and Argentina, the general economic slowdown weighed on sales.
"Europe realised accelerated growth in the second half of the year, with France, Nestlé's largest European market, growing at more than twice the level of the previous year. In 2002 Russia for the first time achieved sales of over 1 billion Swiss francs, and Greater China exceeded SF1.4 billion in sales."
As far as product sectors are concerned, the group's water business had a very successful year and managed to increase sales, market share and profits in a highly competitive environment. Many product groups also managed to improve their profit margins, including ice cream and chilled dairy, as well as milk powders, prepared dishes and cooking aids, and the Cereal Partners Worldwide business (a joint venture with General Mills of the US). In confectionery, the group managed to maintain margins in spite of higher cocoa prices.
And there is little likelihood of the world's number one losing its crown in the coming year, either. "Nestlé showed in 2002 that even in difficult market conditions the group is able to deliver strong results," said Brabeck. "2003 could again be a testing year. The group is, however, well placed to deliver industry leading organic growth rates, a key health indicator for the food business. The group will continue to focus on margin and further cash flow improvements, pursuing its policy of long-term profitable growth. Barring major unforeseen events, Nestlé expects to continue to improve its performance in 2003."