Nestle profits rise, but held back by weak pricing in Europe
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FRANKFURT, Germany — Food company Nestle S.A. says net profit rose 44 percent last year as the company booked one-time gains from the sale of a stake in L’Oreal and its purchase of dermatology company Galderma.
Stripping out those gains, the maker of Lean Cuisine, Nespresso and Maggi brands said Thursday its earnings per share increased 4.4 percent.
Annual sales fell in Swiss franc terms due to hesitant consumers in Europe and shifting exchange rates.
Swiss-based Nestle reported weak sales growth in Europe, saying business conditions there were volatile, “with deflationary pressure increasing during the year.” That meant little flexibility to increase prices. Sales in Europe rose only 1.5 percent stripping out currency effects and acquisitions.
Consumer prices have fallen in Europe due to lower oil prices and a weak economy. That has led the European Central Bank to announce a 1.1 trillion euro monetary stimulus through bond purchases to start next month in an attempt to get the economy moving.
CEO Paul Bulcke said the earnings figures were “strong results” that were “delivered in a soft trading environment. ”
The company predicted an increase in earnings this year and said it would raise its dividend to 2.20 francs from 2.05.
Net profit rose 4.4 billion francs to 14.5 billion francs ($15.4 billion) on sales of 91.6 billion francs. The year sales figure was off 0.6 percent, lowered by currency exchange rate effects.
The company’s 50 percent stake in Galderma was revalued upward after it was raised to 100 percent during the year.
BY DAVID McHUGH, AP Business Writer