Nestlé Group announced its financial results for the year ended 2005 posting record sales and profits for the year under review.

Reported sales amount to a new high of more than CHF 91 billion, up 7.5 per cent. The single most important factor in this increase is the strong real internal growth of 4.2 per cent which, with pricing of two per cent, creates organic growth of 6.2 per cent, clearly above market growth. For the first time in five years, many of the Group’s key trading currencies appreciated against the Swiss franc, resulting in a positive contribution to consolidated sales in Swiss francs of 1.8 per cent. Divestments outweighed acquisitions by 0.5 per cent, and slightly reduced sales.

With CHF 11,720 million, the Group’s EBITA improved by 8.9 per cent and now stands at 12.9 per cent of sales, an improvement of 20 basis points. Despite rising input costs and some unforeseen one-off costs such as the product exchange in China, Nestlé was able to grow margins because of its strong top-line growth and the good results yielded by the cost saving initiatives, Operation Excellence 2007 and Project FitNes and a strong performance by Alcon.

As a result of its strong savings focus, Nestlé was able to absorb the increased cost of equity based remuneration, as well as the significantly increased energy and raw material costs. Cost of goods sold, at 41.7 per cent of sales, and distribution costs therefore remained stable, whereas continued efficiency measures even drove marketing and administration expenses down 10 basis points as a percentage of sales. The Group spent CHF 1.5 billion (1.6 per cent of sales) on research and development.

Net profit reached a record CHF 7, 995 million, up 20.7 per cent or 8.8 per cent of sales. Earnings per share were up 21.3 per cent, amounting to CHF 20 million. The strong performance in 2005 enables the Board to propose a dividend increase of 12.5 per cent to CHF nine per share.