Nestle Shows Increase in Profit for FY 2018


Nestle SA (NSRGY) recently posted their financial results for the 2018 fiscal year. The company showed an impressive profit increase of 45 percent, reaching 14.5 billion Swiss francs ($15.4 billion). It should be noted that the increase in profitability is due, in part, to the world’s leading group in the food industry selling off their shares in L’Oreal, a French cosmetics group. This is why they managed to post an increase in profit despite the fact that sales slipped.

Thus, the company achieved a profit that was far higher than most analysts expected, with the cited figure being approximately 10.3 billion Swiss francs, or $10.94 billion.

It should be noted that if the income resulting from the L’Oreal stake sale weren’t taken into account and if the gains on their stake in the Galderma medical unit were reevaluated, then the company achieved a profit increase of only 4.4 percent, on a constant currency basis.

The company saw their sales decline by 0.6 percent, to reach 91.6 billion Swiss francs ($100.2 billion). This decline is mainly the cause of the adverse effects of currency exchange rate volatility. This volatility has led to a contraction of 5.5 percent in sales. Despite this, the company posted an increase in underlying EPS of 4.4 percent, while their operating cash flow also proved solid at 14.7 billion Swiss francs.

A key metric of performance for Nestle is their organic growth, which grew by 4.5 percent in 2018. The figure was calculated according to a real internal growth of 2.3 percent, while the remainder of the 2.2 percent was the result of pricing.

Paul Bulcke, the head of the company, stated that the results were solid and that they were owed to solid growth over the last few years, which were achieved in a relatively weak trading environment.

The board of Nestle plans on proposing an increase in dividends paid out to shareholders. Thus, a dividend of 2.2 Swiss francs per share will be recommended, which is slightly higher than the 2.15 Swiss francs paid out the previous year.

In terms of the future, Nestle is expecting 2018 to net them similar results to 2017 The company went on to say that they are aiming to achieve an increase in organic growth of approximately 5 percent. After the announcement was made, the company’s share price climbed slightly, by 0.42 percent, reaching 71.4 Swiss francs ($78.1) per share. At the same time, the main SMI index of the Swiss stock exchange increased by 0.17 percent.

Nestle has been trading between a low of $65.79 and a high of $80.65 over the past 12 months. The group has a market cap of $245.73 billion and a price to earnings ratio of 22.77.



Justin Cohen covers large and mid-cap healthcare stocks. Justin joined Micro Cap Mag in 2013 to work as an associate on the Biotechnology team. He quickly moved into his current Senior Analyst role earlier this year.

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