VEVEY, SWITZERLAND — Nestlé reported on Feb. 18 its 2015 annual net profit was CHF 9.1 billion ($9.14 billion). The reduction of CHF 5.4 billion versus last year was due to the one-off impact from the disposal in 2014 of part of the L’Oréal stake combined with revaluation of the Galderma stake.

Nestlé’s Asia, Oceania, Africa and Middle East (AOA) Zone was impacted by the Maggi noodles issue in India. It had a sale of CHF 14.3 billion. Maggi noodle production and sales were halted in India for five months while the company addressed allegations against its noodles. Nestlé reintroduced the noodles into the market in November 2015. The emerging markets improved gradually, with China show increased momentum towards the end of the year, the company said.

AOA’s trading operating profit margin remained strong and accretive to the company, despite the withdrawal and destruction costs of noodles in India. The evolution in favorable input costs enabled increased investment in consumer facing market support, Nestlé said.
“In 2015 we delivered profitable growth at the higher end of the industry in what is still a challenging environment,” said Paul Bulcke, Nestlé chief executive officer. “This profitable growth was on the back of consistent performances in previous years. Our organic growth of 4.2% was supported by increased momentum in real internal growth combined with continued margin improvement. Additionally, we grew or maintained market share in the majority of our categories and markets. At the same time we continued to invest for the future with increased support behind our brands and further development of our new platforms in nutrition and health as well as Ecommerce. We kept up the focus on portfolio management, turning around our frozen food business in the United States, disposing of non-core businesses and forging a new partnership to create a leading player in ice cream.”

Trading operating profit was CHF 13.4 billion, with a margin of 15.1%, down 20 basis points on a reported basis affected by the strong Swiss Franc, up 10 basis points in constant currencies. Nestlé delivered this margin improvement while absorbing:

- Increasing substantially the investment in brand support, digital, research and development, and in new nutrition and health platforms.

- Absorbing the cost of exceptional events like Maggi noodles in India.

“Our free cash flow generation was again at the top end of the food industry at 11.2% of sales, as a result of our focus on margins with discipline in capital expenditure and working capital,” said Bulcke. “Consequently we propose to increase the dividend as we have for the last twenty years. We anticipate that our trading environment in 2016 will be similar to previous years with even softer pricing. As such we expect to deliver organic growth in line with 2015, with improvements in margins and underlying earnings per share in constant currencies, and capital efficiency.”