Nestle shrugged off investor concern about the impact of the sudden appreciation of the Swiss franc by increasing its dividend, despite experiencing a small drop in sales in 2014 amid lacklustre Asian demand and a difficult economic climate in Europe.
The world's largest food company by sales normally targets annual growth of between 5 per cent and 6 per cent, but it grew 4.5 per cent in 2014 after registering a 0.6 per cent drop in sales to SFr91.6bn (€85.2bn). The growth figures were in line with analyst expectations, according to a Reuters poll.
In a sign of confidence, the group said that it would increase its dividend to SFr2.20 per share, up from SFr2.15 a year ago. Net profits, meanwhile, rose SFr4.4bn to SFr14.5bn, in part due to the profit realised on the disposal of the group's stake in L'Oreal last year.
Some investors had speculated that the Swiss company would be forced to cut or hold its dividend at last year's level in response to the sudden appreciation of the Swiss franc. The company's share price suffered a sharp drop after the Swiss National Bank announced the removal of the cap on the Swiss franc against the euro in January, but its shares have since recovered, trading 8 per cent higher year on year.
On Thursday, the group said it had suffered "no material impact" as a result of the sharp rise in the Swiss franc in terms of its currency exposures, counterparty risk and pensions.
Paul Bulcke, chief executive, said: "These are strong results, building on the good growth of past years and delivered in a soft trading environment." He added that the food manufacturer's growth target of 5 per cent remained unchanged for 2015.
Some investors were underwhelmed by the group's 2014 performance. Eleanor Jolidon-Taylor, a Geneva-based fund manager at Union Bancaire Privee, described the results as "pleasantly boring". "There are no fireworks for 2015 and problems remain in [Asia, Oceania and Africa]. [Results were] better than I feared in the US and really surprisingly good in Europe," she said.
Andrew Wood, analyst at Bernstein, was more impressed. "Overall, it was a nice, solid reporting," he said. "2014 can be considered to be a very solid year for Nestle in a tough environment. Nestle continues to demonstrate how solid and reliable it is, and we expect this to continue in 2015. We would expect a mildly positive stock reaction."
Analysts at Swiss private Bank Vontobel were similarly positive. "Nestle remains best-in-class in the industry, and a core holding in our view. We hope for more action in M&A and divestments of underperformers," they said.
The company described sales growth in Europe of 1.5 per cent as "good" compared to the market, driven by strong demand for Nescafe Dolce Gusto, the coffee brand, across Western Europe; Kitkat, the chocolate bar, in Central and eastern Europe; and pet food line Petcare across Europe.
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