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Full year sales rose 1.2% to 92.6bn Swiss Francs (CHF), behind analysts’ expectations of CHF 93.4bn. Excluding disposals of Nestlé Skin Health and Gerber Life Insurance, as well as unfavourable currency movements, sales rose 3.5%.
The board has proposed a dividend of CHF 2.70 per share, an increase of 25 centimes, and commenced a new CHF 20bn buyback program in January.
The shares fell 1.3% following the announcement.
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Full year trading details (changes on an underlying basis unless otherwise stated)
Trading operating profit, which ignores the effect of restructuring expenses in the Chinese canned good business, rose 4.8% to CHF 16.3bn. Trading operating margins rose 0.6 percentage points to 17.6%, helping the group reach its 2020 profitability target one year ahead of schedule. That was driven by cost savings, and improved pricing along with a favourable mix of products sold.
The improved operational performance and share buyback program helped earnings per share rise 11.1% to CHF 4.41.
In The Americas, sales rose 3.9% to CHF 33.2bn, driven by a 2.6% increase in volumes and a 1.3% improvement in price. North America saw its strongest volume uplift in over a decade, and there was strong demand for Purina PetCare and beverage products. Operating profit rose around 7.7% to CHF 7bn, despite increased marketing spend.
Asia, Oceania and sub-Saharan Africa saw sales rise 3.2% to CHF 21.6, operating profit reached CHF 4.9bn (2018: CHF 4.8bn).
Sales rose 2.7% in EMENA (Europe, Middle East and North Africa), reaching CHF 18.8bn as volume increases offset negative pricing. Each sub-region had positive organic growth, with acceleration in Western Europe and Eastern Europe, particularly Russia. Operating profit rose slightly to CHF 3.6bn (2018: CHF 3.5bn), helped by cost reductions.
Waters organic revenue rose 0.2% to CHF 7.9bn, as positive pricing offset volume declines. The Other businesses unit, including Nespresso and the health and skin care divisions, posted organic growth of 6.4%.
Free cash flow grew by 10.9% to CHF 11.9bn, which combined with the disposals of Nestle Skin Health and the US ice cream business, saw net debt fall to CHF 27.1bn (2018: CHF 30.3bn).
The group expects restructuring costs to be around CHF 500m next year, and is closely monitoring the impact of the coronavirus.
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