Nestlé posts US$8.5 billion profit for 2016

Swiss coffee and food giant Nestlé has reported its results for the full year of 2016, with total sales of US$89.7 billion and a net profit of $8.5 billion. The company saw organic growth of 3.2 per cent across the business and improved its operating profit margin by 30 basis points to 15.3 per cent. Nestlé’s CEO, Mark Schneider said the results will translate into an increase in dividends for shareholders. “Our 2016 organic growth was at the high end of the industry but at the lower end of our expectations,” he said in a statement. “We saw a solid trading operating profit margin improvement and our cash flow grew significantly. Based on these results, our Board of Directors is pleased to propose the 22nd consecutive dividend increase, underlining our commitment to continuity.

“In 2017, we expect organic growth between 2 per cent and 4 per cent. In order to drive future profitability, we plan to increase restructuring costs considerably in 2017. As a result, the trading operating profit margin in constant currency is expected to be stable. Underlying earnings per share in constant currency and capital efficiency are expected to increase.

“Nestlé continues to invest in future growth and operating efficiency, targeting mid-single digit organic growth and significant structural cost savings by 2020.” Nestlé’s mainstream coffee business, Nescafé, performed well across most markets, with good growth in Latin America, Europe, the Middle East, North Africa and China. Nestlé’s single serve brand Nespresso continued to grow in its 30th year. The US and Canada saw strong momentum from the continued success of the VertuoLine system. Sales in France also benefitted from the launch of VertuoLine at the end of the year. The UK saw strong acceleration following brand investment and the launch of a subscription model. In Asia, both China and Korea performed well.

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