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Nestlé reports lower profits amid slow growth

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Nestlé reports lower profits amid slow growth
Nestlé headquarters, overlooking Lake Geneva in Vevey. Photo: Nestlé
09:46 CET+01:00
Swiss-based Nestlé, the world's biggest food company, on Thursday reported a net profit of 10 billion francs ($11.14 billion) for 2013, down from 10.6 billion francs in the previous year.

Revenues increased 2.7 percent to 92.2 billion francs, but this marked the slowest sales growth in four years.

The company, headquartered in Vevey in the canton of Vaud, blamed the dip in profit on the “costs of portfolio restructuring” and the impact of the strong Swiss franc.

It said underlying earnings per share in constant currencies were up 11 percent.

"The macro-environment in 2013 was one of soft growth, minimal in the developed world and below recent levels in the emerging markets,” Nestlé CEO Paul Bulcke said in a statement.

“Our response was to increase brand support, accelerate innovation, and to ensure our pricing was sensitive to consumer needs,” Bulcke said.

“This gave impetus to our real internal growth and, together with efficiencies and structural cost savings, contributed to our margin improvement and strong cash flow.”

The earnings report came a day after Nestlé announced it was launching a skincare business while reducing its stake in L’Oréal, the French cosmetics giant which it has been a part owner of for 40 years.

"Our long-term strategic direction is to be the leader in nutrition, health and wellness,” Bulcke said.

He warned that 2014 would likely be as challenging as the last year but forecast similar results.

With operating cash flow of 15 billion francs, the company is proposing to increase its dividend to 2.15 francs a share.

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