Nestlé, the world’s largest foodmaker, today (Friday), posted 2000 net profits of SFr5.763bn, a 22% increase on 1999. Sales climbed 9.1% to SFr81.422b. Results matched analysts’ positive expectations and CEO Peter Brabeck said he “expects the group to finish the year with higher sales and profits.” just-food.com reports from Geneva.


Unveiling results at its Vevey headquarters, the company said that 2000 sales were boosted by a 5% rise in the fourth quarter. Year-end results show a record 4.4% growth in real internal group sales, compared to 3.6% in 1999 and a long-term trend target of 4%.


Brabeck was jubilant: “We are now harvesting the results of our relentless push for continuous improvement, and the business strategy is delivering sustainable, capital-efficient and profitable long-term growth.”


“Nestlé is confident it can continue the process of performance improvement during the current year, and barring unforeseen events, will close 2001 with higher sales and profits than in 2000,” he said. Nor does Brabeck expect the US slowdown to have “a noticeable impact on our business.”


No plans to list on NYSE “anytime soon”


Nestlé denied it has any intention of listing on the New York Stock Exchange “anytime soon.” However its delisting from the Amsterdam, Brussels, Tokyo and Vienna exchanges will complete this year, it said. This will leave Nestlé trading only in Zurich, London, Frankfurt and Paris. The aim, said the company, was to “simplify life” and save costs, and not a market signal.


Brabeck also defended decisions to move into the three areas of water, pet foods and ice cream. Nestlé has become the foremost seller of bottled water and the top petfood manufacturer, he said, thanks to the “perfect fit” of the Ralston Purina purchase agreed last month.


Could control Häagen-Dazs by July…


The Nestlé CEO added that he expects the company this year to exercise its option to buy the other half of Ice Cream Partners USA which combines Nestlé ice-cream and Häagen Dazs in the US . Nestlé, which already holds a 50% stake in the company, has a purchase option if HD changes ownership. With General Mills only awaiting regulatory approval to buy HD’s owner, Pillsbury, from Diageo, Brabeck said that he is hopeful of full control of the brand by July.


A proposed cooperation between Coca-Cola and Procter and Gamble will have “no impact” on the independent tea, coffee and herbal beverage company that Nestlé and Coca-Cola have planned, said the CEO.


…while deepening of Snow Brand alliance likely


Finally, Mike Garrett, head of Nestlé Asia, Oceania and Africa, said he hopes for further opportunities to expand into the difficult Japanese market. Garrett said there are opportunities to consolidate its alliance with Snow Brand and “look where we can build business together.”


Garrett explained that he hopes to expand the existing business with UCC, Pokka and Otsuka in the canned drinks distribution business and Snow Brand’s chilled dairy products.


The Asia head added that cooperation with Snow Brands last year over their poisoning problems was purely a question of offering Nestlé’s technical expertise.


Analysts impressed


While all geographic areas beat their growth targets, said Brabeck, Europe’s 3% fall in sales was the result of divestment of Findus (worth around SFr900m) and the impact of the euro’s depreciation on currency markets.


Nevertheless, an “excellent second half” pushed strong growth in Eastern Europe to 18% and more than 40% in Russia.


With profit margins up 1.8%, making SFr3.1bn in savings, Brabeck concluded there remains “ample room for improvement,” forecasting SFr600m in savings in 2001.


Nestlé shares gained 1.7% or SFr60 by midday on the Zurich SMI to SFr3610 on the back of the results.


“While the overall results were in line with our expectations, we were pleasantly surprised by the strong 4.4% real internal sales growth posed by the group in 2000,” said Daniel Zuercher, equities analyst with Zürcher Kantonalbank.


By Warren Giles, just-food.com correspondent based in Geneva