Back to Press releasesVevey,Feb 26, 2004

  FY 2003 FY 2002
Constant currency sales
CHF 87 979 mio
CHF 89 160 mio
Constant currency EBITA margin
CHF 11 006 mio
+60 basis points
CHF 10 940 mio
Net profit CHF 6 213 mio CHF 7 564 mio
Underlying EPS CHF 20.23 CHF 18.90
Dividend Proposal CHF 7.20 CHF 7.00

  • Constant currency sales up 6.3 percent
  • Foreign exchange reduces sales by 7.6 percent
  • 5.1 percent organic growth – within target range
  • EBITA margin in Swiss francs up 20 basis points to record 12.5 percent
  • In constant currencies, margin increases 60 basis points, demonstrating sustainable operating improvement
  • Operating cash flow of CHF 10.1 billion, near all-time high; free cash flow up 1.3 percent to record CHF 6 361 million

Peter Brabeck, CEO of Nestlé, said: "Nestlé has delivered both a good, sustainable improvement in performance and an organic growth within our target range. This is a strong performance in an adverse economic and political environment, with powerful currency headwinds for the third successive year. I am satisfied that the Group is capable of continuing to deliver margin improvement, supported by our efficiency programs and continued strong organic growth. Our leading market positions and global reach put us in an excellent position for the somewhat more positive external environment of 2004.”

On consolidated sales of CHF 87 979 million, the Nestlé Group achieved EBITA (Earnings Before Interest, Taxes and Amortization of goodwill) of CHF 11 006 million, resulting in an all-time high margin of 12.5 percent of sales. Net profit amounted to CHF 6 213 million, a margin of 7.1 percent, whilst earnings per share were CHF 16.05; because of one-off factors in 2002, these figures are not comparable. The comparable figures show that the underlying net profit margin increased 70 basis points from 8.2 to 8.9 percent, whilst the underlying earnings per share increased 7.0 percent from CHF 18.90 to CHF 20.23.

In US dollars, the Group would have grown sales by 13.7 percent to USD 65.5 billion (USD 57.6 billion in 2002) and increased EBITA 15.9 percent from USD 7.1 billion to USD 8.2 billion.


At constant currencies, Group sales grew 6.3 percent. The 5.1 percent organic growth was within the target range. Pricing contributed 2.9 percent and real internal growth 2.2 percent. This reflects Nestlé’s declared policy of favoring margins over volume in a period that saw higher raw material costs and weaker US dollar related currencies. All Zones saw positive organic growth rates. Eastern Europe, Latin America, the emerging markets of Asia as well as Africa and the Middle East clearly outpaced the Group average, as did Nestlé Waters, the joint ventures and the pharmaceutical sector. The USA and Canada look back on a very successful year and China, India and Indochina also performed well. Alcon's sales increased 13.2 percent to USD 3.4 billion.

Soluble coffee, chilled culinary, nutrition, ice cream, chocolate, and breakfast cereals delivered good organic growth.

The strong Swiss franc had a negative impact of 7.6 percent on the Group’s consolidated sales. Acquisitions net of divestments contributed 1.2 percent to reported sales.

Profit, Cash Flow and Net Debt

The Group’s EBITA amounts to CHF 11 006 million, resulting in a margin of 12.5 percent (12.3 percent in 2002). Nestlé achieved its objective of continuous, sustainable margin improvement despite the foreign exchange impact. At constant currencies EBITA increased over 10 percent with a margin improvement of 60 basis points to 12.9 percent.

All three geographic Zones contributed to the improvement in Swiss franc EBITA margins, with particularly strong advances in the Americas and in the water business. In the product groups, pet care made significant progress with an increase of 150 basis points in EBITA margin, reflecting the positive effect of the integration of Purina. Prepared dishes and cooking aids improved by 90 basis points, buoyed by the success of the recently acquired Chef America. There were good improvements also in ice cream and chilled dairy, amongst others.

Net profit amounts to CHF 6 213 million (CHF 7 564 million in 2002, strongly influenced by one-off factors such as the Alcon partial IPO, the FIS divestiture and charges relating to restructuring and impairments) and earnings per share to CHF 16.05 (CHF 19.51 in 2002). The underlying net profit, stripping out results on disposal, significant one-time benefits and charges, amortization, impairment and restructuring costs, increased to CHF 7.8 billion, resulting in underlying earnings per share of CHF 20.23, an increase of 7.0 percent.

Operating cash flow reached CHF 10 125 million, with a free cash flow of CHF 6 361 million, which corresponds to a record 7.2 percent of sales. These figures represent a good performance in the context of the 7.6 percent negative foreign exchange impact on sales.

The Group reduced its net debt (total financial liabilities net of liquid assets) slightly to CHF 14.4 billion and, although its average net debt was higher than in 2002, it also reduced its net financing cost. The Group’s net debt / equity ratio improved to 38 percent from 42 percent in 2002, strengthening its AAA credit rating. Capital expenditure fell to CHF 3 337 million, or 3.8 percent of sales. Return on invested capital, excluding goodwill, rose from 18.9 percent to 19.9 percent.


After successfully coming through a challenging year, the Group looks forward to 2004 with cautious optimism. It will pursue its policy of bringing continuous, sustainable improvement to its margins and it maintains its objective of achieving between 5 and 6 percent organic sales growth. As a result of the growing contribution of the efficiency programs and on the strength of its popular brands and broad presence, Nestlé is confident on being able to deliver on both fronts.

Board Decisions

At its meeting of February 25, 2004 the Board of Directors approved the fully audited accounts and decided to propose to the General Meeting of Shareholders a further increase in dividend to CHF 7.20 per share (CHF 7.- for 2002). Provided the General Meeting accepts this proposal, the dividend will be payable on April 28, 2004.

At the General Meeting, the terms as directors of Mrs. Vreni Spoerry, Lord Simpson and Mr. Arthur Dunkel will expire. These directors are not seeking re-election. The Board expresses its gratefulness to the retiring members for their contribution and the leadership, knowledge and experience they brought to the Company. It recommends the General Meeting to elect Sir Edward George, Mr. Kaspar Villiger, Mr. Rolf Hänggi, Mr. Daniel Borel and Mrs. Carolina Müller-Möhl as new directors.

The General Meeting of Nestlé S.A. will take place on April 22, 2004 at 15:00 at the Palais de Beaulieu in Lausanne. No transfer of shares affecting voting rights will be registered between April 2nd, 2004 and the day of the General Meeting. The management report will be available from March 25, 2004, whereas the fully audited financial statements are displayed as of today on the Nestlé Investor Relations Website.

Download the following pdf:
2003 Consolidated Accounts of the Nestlé Group
Media: François-Xavier Perroud Tel.: +41-21-924 2596
Investors: Roddy Child-Villiers Tel.: +41-21-924 3622
Related Links:
2003 Financial Statements