GENEVA (AP) -- Swiss food and drinks company Nestle SA on Thursday reported a 69 percent increase in full-year net profit thanks largely to the sale of a stake in eyecare company Alcon, and said it aimed to grow sales with low-cost products like bouillon cubes and instant coffee during the global downturn.
The company -- whose brands include Nescafe, Perrier, Jenny Craig and Haagen Dazs -- said net profit rose to 18 billion Swiss francs ($16.61 billion) from 10.65 billion francs in 2007. That was boosted by a gain of 9.2 billion francs from the sale of a 24.8 percent share in Alcon to Swiss-based drugmaker Novartis AG.
Excluding the Alcon deal, Nestle's net profit would have dropped about 17 percent to about 8.8 billion francs.
Full-year sales increased 2.2 percent to 109.9 billion francs -- slightly below analyst estimates. The company noted that the stronger Swiss franc had weighed on sales by 7.8 percent.
Analysts at Zuercher Kantonalbank said the results were below expectations and noted that growth slowed toward the end of the year. Nestle has also cut back its share buyback this year to 4 billion francs from 8.7 billion in 2008, they noted.
However, the company proposed an increased dividend of 1.40 francs per share, while underlying earnings per share grew 0.7 percent -- 10.9 percent in constant currencies -- to 2.82 francs.
The company's shares rose 5.6 percent to 39.10 francs ($33.30) on the Swiss exchange.
Sales in Europe and in its global bottled water business dropped slightly, while the rest of the world and Nestle's nutrition unit saw sales increase.
"The group's results in 2008 are broad-based, demonstrate its intrinsic strength and provide momentum into 2009," Chief Executive Paul Bulcke said in a statement. "Nestle's ability to capitalize on a wide variety of market conditions across the world remains one of its decisive competitive advantages."
Bulcke said Nestle aims to achieve "at least approaching" 5 percent organic growth in 2009, capitalizing on the global economic downturn by selling more of its low-cost branded product. These include Maggi bouillon cubes, Munch chocolate and Nescafe Classico instant coffee.
Andrew Wood, a senior researcher at Sanford C. Bernstein, said the guidance "is not quite convincing" given that previous targets had been higher.
Nestle declined Thursday to provide details on its future relationship with cosmetics company L'Oreal, in which it holds more than a quarter stake. Nestle cannot sell its stake before April 29, when its share lockup agreement with L'Oreal expires.
Analysts have speculated that Nestle may exit L'Oreal, as it doesn't fit in with the Swiss company's stated strategy aim of focusing on nutrition, health and wellness products.
During a mews conference, Nestle executives declined to provide details on the increased litigation provisions, which were up by almost 500 million francs.
"These provisions concern numerous cases whose detailed disclosure could seriously prejudice the interests of the group," the company said in a statement.