Alcon sale boosts Nestle profit

Nestle - Underlying Profit from Operations Dropped

Nestle – Underlying Profit from Operations Dropped

The sale of eye-care specialist Alcon boosted profits of Swiss food giant Nestle to 34.2 billion Swiss Francs ($35.6 billion, £22.1 billion), from 10.4 billion Swiss Francs reported a year earlier.

Nestle had sold off Alcon to Novartis for 24.5 billion Swiss Francs. Underlying profit, excluding the Alcon sale fell by 7% to 9.7 billion Francs.

Nestle said it is well placed to face ‘uncertainties’ in 2011, including rising input costs. The company – which owns brands such as instant coffee ‘Nescafe’, drinking water ‘Perrier’, chocolate bar KitKat and Haagen Dazs ice cream, said it has already witnessed the effect of rising commodity prices.

Chief Financial Officer Jim Singh said: “We saw a significant uptick in raw material prices in the second half.

“We expect 2.5 to 3bn Swiss francs additional input costs in 2011”, he added. That translates into a hike of 8-10% on a cost base of about 30 billion Swiss Francs, A Nestle spokesperson clarified.

“I cannot tell you what the pricing will be, that depends on the different markets”, clarified Mr. Singh indicating that the price impact will be uneven.

The company is however, upbeat about its revenue growth in 2011. Excluding currency movements, disposals and acquisitions, Nestle hopes to clock a growth rate of 5-6% in 2011.

The firm announced an increased dividend of 1.85 Swiss Francs form 1.60 Francs per share.

Jon Cox – an analyst at Kepler Research said: “A very strong set of figures with underlying earnings… on the back of stronger-than-expected top-line growth driven by emerging markets and Asia. Its outlook statement is reassuring”.

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