AP News, February 22nd, 2007
Nestle SA, the world's biggest food and drink company, said Thursday its 2006 profit rose 14 percent after the company restructured some parts of the business and increased prices.
Nestle, which reports earnings only for the full year and half year, said net profit increased to 9.2 billion Swiss francs ($7.4 billion) from 8.1 billion francs in 2005. Analysts had predicted net profit of about 9.1 billion francs ($7.36 billion).
The company, which owns brands such as Nescafe, Perrier and Dreyer's, said it plans to increase its dividend to 10.4 francs a share ($8.49).
It said no further share buyback was likely in the short term, dashing hopes Nestle would continue a recent policy of returning money to shareholders.
Sales grew to 98.5 billion francs ($79.6 billion) compared with 91.1 billion francs in 2005. Analysts had expected sales worth 98.3 billion francs ($79.5 billion).
"We are seeing the benefits of the Group's transformation into a nutrition, health and wellness company, with stronger innovation and branding, as well as improved efficiency," Chief Executive Peter Brabeck-Letmathe said in a statement.
Nestle shares were up 2.2 percent at 474.0 francs ($383.12) on the Zurich stock exchange.
Analysts said the results were strong, exceeding their expectations across the board.
"The dividend increase was a positive surprise while the absence of another share buyback was a disappointment," said Bernstein Research analyst Andrew Wood.
In 2006, Nestle bought back shares worth 3 billion francs and analysts had hoped the company would follow this with a 4 billion franc buyback ($3.2 billion) this year.
Barbeck said the company had strengthened its portfolio with recent acquisitions that include U.S. health care and weight control company Jenny Craig.
