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Nestle hurdles price hikes with procurement

By: Kristie Thong, Global
Published: Feb 21, 2011

PROCUREMENT STRATEGY   NESTLE   GROWTH

Global – Nestle is able to offset the impact of raw material price hikes and triple its profits in 2010, thanks to its procurement strategy.

The company accumulated a net profit of CHF 34.2 billion  (US$36.2 billion) for the full year of 2010, up from CHF 10.4 billion in 2009.

“Our savings, procurement strategy and leverage from growth more than compensated the cost pressures during the year, which increased in the second half. Our efficiency and effectiveness also contributed to an improved environmental performance in areas such as energy, water and packaging usage,” the company said in a statement.

Nestle’s distribution costs fell by 20 basis points, while administrative costs fell by 70 basis points due to “rigorous” control of fixed costs, Procurement Leaders reported.

Paul Bulcke, CEO for Nestle said: “We are starting 2011 with continued momentum, well placed to face uncertainties ahead, including volatile raw material prices. We are therefore confident of achieving the Nestle Model in 2011: organic growth between 5% and 6% and an EBIT margin improvement in constant currencies.”

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Companies featured:

  • Nestle