Financial Analysis for Nestle

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Income Statement
Nestlé S.A.|
Consolidated income statement|
for the year ended 31 December 2008-2010|
In million of CHF|  | 2010| 2009| 2008|
 |  |  |  |  |  |
Sales|  |  | 109,722| 107,618| 109,908|
Cost of goods sold|  | 45,849| 45,208| 47,339|
Gross profit|  | 63,873| 62,410| 62,569|
Selling, general, and admin.expense| 45,798| 45,140| 44,916| Research and development costs| 1,881| 2,021| 1,977|
EBIT Earnings Before Interest, Taxes, restructuring and impairment| 16,194| 15,699| 15,676| Other income|  | 24,741| 509| 9,426|
Other expenses|  | 2,115| 1,238| 2,124|
Profit before interest and taxes| 38,820| 14,970| 22,978| Interest income|  | 94| 179| 102|
Interest expense|  | 847| 794| 1,247|
Net interest expense|  | 753| 615| 1,145|
Profit before taxes and associates| 38,067| 14,355| 21,833| Taxes|  |  | 3,693| 3,362| 3,787|
Share of result of associates| 1,010| 800| 1,005|
Profit for the year|  | 35,384| 11,793| 19,051|
of which attributable to non-controlling interests| 1,151| 1,365| 1,012| of which attributable to shareholders of the parent (Net profit)| 34,233| 10,428| 18,039|  |  |  |  |  |  |

As percentages of sales|  |  |  |
EBIT Earnings Before Interest, Taxes, restructuring and impairment| 14.80%| 14.60%| 14.30%| Profit for the year attributable to shareholders of the parent (Net profit)| 31.20%| 9.70%| 16.40%|  |  |  |  |  |  |

Earnings per share (in CHF)|  |  |  |
Basic earnings per share| 10.16| 2.92| 4.87|
Fully diluted earnings per share| 10.12| 2.91| 4.84|
 |  |  |  |  |  |

Kraft Foods Inc.|
Consolidated Statements of earnings|
for the years ended 31 December 2010|
In million of dollars|  |  |  |  |
Sales|  |  |  | 49,207|  |
Cost of goods sold|  |  | 31,305|  |
Gross profit|  |  | 17,902|  |
Selling, general and admin. Expense| 12,001|  |
Asset impairment and exit costs|  | 18|  |
Net losses on divestitures|  | 6|  |
Amortization of intangibles|  | 211|  |
EBIT Operating income |  | 5,666|  |
Net interest and other expense|  | 2,024|  |
Earnings for continuing operations before income taxes| 3,642|  | Provision for income taxes|  | 1,147|  |
Earnings for continuing operations | 2,495|  |
 |  |  |  |  |  |
Earnings and gain from discontinued operation, net of income taxes| 1,644|  | Net earnings|  |  | 4,139|  |
Non-controlling interest|  | 25|  |
Net earnings attributable to Kraft Foods| 4,114|  |
 |  |  |  |  |  |
Earnings per share|  |  |  |
Basic earnings per share|  | 2.4|  |
Fully diluted earnings per share|  | 2.39|  |

Common-Sized Income Statement Analysis
Common-Sized Income Statement|  |
 |  |  |  | Nestlé| Kraft Foods|
Line items as a percentage of sales| 2010| 2009| 2008| 2010| | Sales|  |  |  | 100%| 100%| 100%| 100%| |
Cost of goods sold|  |  | -41.79%| -42.01%| -43.07%| -63.62%| | Gross profit|  |  | 58.21%| 57.99%| 56.93%| 36.38%| | Selling, general, and admin.expense| -41.74%| -41.94%| -40.87%| -24.39%| | EBIT|  |  |  | 14.76%| 14.59%| 14.26%| 11.51%| | Net interest expense|  |  | -0.69%| -0.57%| -1.04%| -4.11%| | Income taxes|  |  | -3.37%| -3.12%| -3.45%| -2.33%| | Net income|  |  | 31.20%| 9.70%| 16.40%| 8.36%| | | | | | | | | | |

Explanation:
We use common-sized income statement to compare trends of income statement of the company overtime and also to compare its income statement with other firms. During 2008-2010, Nestle can reduce its cost of goods sold steadily because the company is trying to pursue low cost strategy to be able to compete in the market. Comparing to its competitor, Nestle had lower cost of goods sold as a percentage of...
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