Nestle uncowed by economic outlook

By Jess Halliday

- Last updated on GMT

Related tags Cent Foreign exchange market Currency Exchange rate Nestlé

Nestle expects to carry on seeing growth in earnings over 2009 despite the global recession, using its strong 2008 results as a springboard for growth.

The multinational food maker today reported group sales of CHF109,908m (c €73,700m at today’s exchange rates), up 2.2 per cent on last year and driven by organic growth of 8.3 per cent.

EBIT margin experienced an improvement of 30 basis points (50 per cent in constant currencies) to 14.3 per cent.

CEO Paul Bulcke said the results “demonstrate [the company’s] intrinsic strength and provide momentum into 2009”.​ The goal is to achieve organic growth of close to 5 per cent, and to improve the EBIT margin in constant currencies further.

He added that Nestle is able to capitalise on “a wide variety of market conditions”,​ and that this gives it a competitive advantage.

The news shows that the bulk of major manufacturers can be a cushion against the impact of recession. But the necessity of food and beverages means that, to a certain extent, a large part of Nestle’s offering is recession proof.

Revenues from food and beverages were CHF102,364m (€68655m) in 2008, up 2.1 per cent.

However Bulcke did hint that Nestle will be “accelerating its cost efficiency initiatives” ​in 2009.

Growth platforms

Bulcke said that the main growth platforms worldwide in 2009 are in nutrition, health and wellness, and in popularly positioned products. This latter indicates faith in the ongoing demand of every day consumer products, at a time when consumers have a close eye on their shopping budgets.

Innovation and “renovation of its brands and products”​ is seen to be a big driver: in 2008 investment in research and development for food and beverages was up 15 per cent.

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