In spite of high raw material costs Nestle's profit rose by 16%

In 2007, consolidated sales of the Nestlé Group amounted to CHF 107.6 billion, an increase of 9.2% over the same period last year.

 This was driven by organic growth of
7.4%, consisting of real internal growth of 4.4% and price increases
of 3.0%. Acquisitions net of divestitures, primarily driven by the
acquisition of Novartis Medical Nutrition and Gerber, contributed
another 1.4% of growth while exchange rate fluctuations added another
0.4%. The Group's Food and Beverages business, with sales of CHF
100.3 billion, was the main contributor to growth, achieving organic
growth of 7.1%, consisting of real internal growth of 4.0% and price
increases of 3.1%.

The Group's EBIT grew by 12.9% to CHF
15 billion, resulting in an EBIT margin of 14%, a 50 basis point
improvement over 2006. Food and Beverages' EBIT grew by 12.7% to CHF
12.6 billion, resulting in a margin improvement of 40 basis points.
These performances were achieved in spite of a negative 10 basis
point currency impact. Timely pricing actions, scale efficiencies,
cost reduction initiatives, as well as the ongoing strategic
transformation process allowed the Food and Beverages business to
more than offset higher raw material and energy costs in 2007.

Net profit grew by 15.8% to CHF 10.6
billion, resulting in a net margin of 9.9%, up 60 basis points.
Earnings per share once again grew at a double-digit rate, by 16.4%
to CHF 27.81.

The Group’s operating cash flow
increased by 15.1%, from CHF 11.7 billion to CHF 13.4 billion, while
free cash flow increased from CHF 7 billion to CHF 8.2 billion. Tight
capital management was demonstrated by continued efficiencies in
working capital and the launch of a third share buyback programme.
The return on invested capital (ROIC), excluding goodwill, improved
by 100 basis points, to 22.2%; including goodwill, it was up 50 basis
points, to 12.2%. The Group’s net debt rose to CHF 21.2 billion,
mainly due to the acquisition of Novartis Medical Nutrition and
Gerber, as well as the buyback of shares amounting to CHF 4.4 billion
in 2007.

In 2007, the organic growth of Nestlé's
total Food and Beverages business (including globally-managed
businesses such as Nestlé Waters, Nestlé Nutrition,
Nespresso, the Food and Beverages joint ventures, as well as the
Zones) amounted to 4.2% in Europe, 8.6% in the Americas and 9.6% in
Asia, Oceania and Africa.