Nestlé has insisted it will hit its long-term target of 5% organic growth, despite falling short of that figure last year amid a slowdown in emerging markets and the strengthening Swiss franc.
This morning Nestlé posted organic growth for the 2014 calendar year of 4.5% as sales reached CHF91.6bn – though this represented a 0.6% fall in reported terms due to a 5.5% impact from currency fluctuations.
The world’s largest packaged foods producer also posted a significant rise in profitability, with net profit rising by CHF4.4bn to CHF14.5bn as a result of cost savings and the disposal of part of its L’Oreal stake.
Paul Bulcke, Nestlé CEO called the performance “strong… delivered in a soft trading environment”.
“The results demonstrate the intrinsic strengths of Nestlé: the commitment of our people, our global footprint, the strength of our portfolio and the quality of our innovation. While delivering in the short term, we remain focused on our business long term, strengthening the foundations of future growth.”
Nestlé said it expects 2015 to be similar to 2014, despite the recent rapid appreciation in value of the Swiss franc, with the firm targeting growth of around 5% and improvements in margins.
The appreciation of the Swiss franc had led to speculation that Nestlé would be forced to cut its dividend payment to shareholders, but the company held firm by proposing an increase to CHF2.20 per share from CHF2.15 a year ago.
The January decision of the Swiss National Bank to remove the Swiss franc’s cap in value against the euro saw Nestlé’s share price plunge by around 13% to CHF64.8 but it has since recovered to trade back up at CHF71.5.
Nestlé’s overall organic growth of 4.5% for the year was composed of 2.3% real internal growth and 2.2% pricing.
Europe was the weakest performing of its regional segments, with the continent growing by just 1.9% organically, compared to 5.4% in the Americas and 5.7% in Asia, Oceania and Africa. Developed markets grew by 1.1% representing sales of CHF51.4bn, while emerging markets were up 8.9%.
The group said that trading conditions in Great Britain were “challenging”, alongside other tough markets including Germany Italy and Greece. The overall growth in Western Europe was driven by France, Switzerland, Austria and the Netherlands and a recovery in Spain and Portugal.
Nestlé reported divisional growth across the group, with waters growing by 5.4% organically, nutrition by 7.7% and its other businesses, including Nespresso, up by 7.1%.