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		</div><p><a href="http://londonglossy.com/wp-content/uploads/2011/02/nestle-squeezed-by-rising-costs.jpg"><img class="alignnone size-full" title="Kit-Kat maker Nestle saw profits fall by 7 per cent to 6.2bn pounds" src="http://londonglossy.com/wp-content/uploads/2011/02/min-nestle-squeezed-by-rising-costs.jpg" alt="Kit-Kat maker Nestle saw profits fall by 7 per cent to 6.2bn pounds"/></a></p>
<p>Kit-Kat to Haagen Dazs firm Nestle turned in a weaker underlying performance for 2010 as soaring commodity prices ate into profit margins.</p>
<p>The world&#8217;s biggest food business warned the cost of raw materials &#8211; corn, wheat, cocoa &#8211; is set to continue rising in 2011 and price increases and cost savings will have to be introduced.</p>
<p>Nestle is the latest consumer goods giant to flag up the impact of rising raw material costs, following similar admissions from rivals Unilever, Danone and Procter &#038; Gamble.</p>
<p>After stripping out the sale of its stake in eyecare firm Alcon, the Vevey, Switzerland-based group saw profits dip 7% to 9.7 billion Swiss francs (£6.2 billion) last year. After the Alcon disposal, net profits tripled to 34.2 billion Swiss francs (£22 billion).</p>
<p>But rising prices failed to dent sales, which lifted in line with expectations by 6.2% to 109.7 billion Swiss francs (£70 billion) in 2010.</p>
<p>The company said sales in Europe grew by 2.5% last year, driven by growth in the UK and France, with sales of household favourites such as Nescafe and Kit-Kat among those to stand out.</p>
<p>But the company, which also makes Perrier, said almost a third of its sales &#8211; some 34.3 billion Swiss francs (£22 billion) &#8211; came from food and drinks in the Americas region.</p>
<p>Nestle said the sale of its remaining 52% stake in Alcon to drug maker Novartis allowed it to launch new products, cut its debt, buy back shares and build new factories around the world last year.</p>
<p>Paul Bulcke, Nestle chief executive, said the company continued to outperform the market in 2010 and was well positioned to deal with soaring costs.</p>
<p>He said: &#8220;We are starting 2011 with continued momentum, well placed to face uncertainties ahead, including volatile raw material prices.&#8221;</p>
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