Pet food sales in North America and revenue growth in the developing world were bright spots in 2010 for Nestle, S.A., with U.S. headquarters in Glendale, company officials reported Thursday.
Leaders of the Swiss company said that despite a rise in the cost of raw materials, such as coffee and cocoa, they anticipate revenue growth of between 5% and 6% in 2011.
“The times of today is like a Rubik’s cube,” Chief Executive Paul Bulcke said in a meeting with the press in Vevey, Switzerland. “It is fascinating, interesting, inviting and a hell of a challenge.”
The biggest challenge, he said, is in developed countries, where debt and the lingering effects of the recession are weighing down sales.
In 2010, the company saw sales increase about 6% to 110 billion Swiss Francs, the equivalent, or nearly $116 billion.
Net profit more than tripled from the equivalent of $11 billion to $36 billion, with most of that coming from completing the sale of shares in eye-care company Alcon to Novartis. Without that deal, net profits for the multi-national company — with products ranging from Fancy Feast cat food and Lean Cuisine dinners to Butterfinger candy bars and Pure Life bottled water — would have declined slightly in 2010.
Chief Financial Officer Jim Singh said in a call with investors that revenue from developing markets such as Africa, Latin America and Asia grew 11% in 2010, compared with about 3% in North America and Western Europe. He said strong sales in the last three months of the year boosted most product categories.
Singh said the pet food market promises more growth, because the company is the largest purveyor of cat food in the world, and the number of pets people take on is growing at a rate of 2% a year.
While Singh reported strong results with sales of single-serving portions of ice cream brands, such as Skinny Cow and Haagen-Dazs in North America, “price-led competition” from pizza delivery restaurants undermined Nestlé’s slice of the frozen pizza market
Nestle is seeking cost savings by merging the distribution of ice cream and other frozen foods, a task it hopes to complete in the current year.
“We are working on a number of initiatives to address the issues in U.S. frozen, and expect a gradual turnaround,” Singh said.
Bulcke touted the newly created Nestlé Health Sciences division, which is developing products for those suffering from diabetes, heart disease and Alzheimer’s.
“This is a huge opportunity in the making where we want to have a pioneering role,” Bulcke said.