Personal words. 2018, dear shareholders, ladies and gentlemen, was a year of considerable progress and development for Nestle. Results achieved last year are fully in line with our expectations, and they confirm that your company is one of the best performing and most consistent in its industry. These results also confirm the relevance of Nestle's strategy as well as the strength of its value creation model. Value that's been created for you, our shareholders, but also value that's being created for the communities in which we live and value created for society at large, value that is created not only over the long term but also year after year.
In 2018, Nestle accelerated its growth in an environment and sector that remain highly competitive and demanding. Our trading operating profit margin increased significantly. We've become even more efficient and reduced our structural costs, and we've continued to develop our portfolio of activities and brands. Allow me to pay tribute to the excellent work of our management team here with me on the rostrum. They have executed executed, sorry, they have carried out Nestle's strategy, invested wisely for the future and made effective decisions and necessary changes throughout 2018.
I would also like to express my sincere gratitude to the more than 300,000 Nestle employees around the world. It is due to their work, dedication and determination that the success of your company is built on day after day. I'd like to thank them all on behalf of the Board of Directors and I am sure on behalf of every one of you. Thank you. Thank you for them.
Dear shareholders, Nestle's Nutrition, Health and Wellness strategy is more relevant than ever. It is fully in line with the needs, expectations and preferences of our consumers and society as a whole. These preferences are part of a major challenge that we will all face by 2,050 to feed a population of 10,000,000,000 people in a healthy and sustainable way. Nestle's clear strategic direction will help to identify significant growth and value creation opportunities in the years to come. In 2018, your company's Board of Directors confirmed and even strengthened Nestle's Nutrition, Health and Wellness strategy with an even greater focus on food, beverages and nutritional health.
In 2018, the Board also continued its renewal. The members of the Board that you, our shareholders, have elected in recent years have brought to Nestle skills and perspective that are helping to prepare for the future and seize long term opportunities. It is in that spirit that we are proposing today the election of 2 new directors. But naturally, we'll come back to that later on. Throughout 2018, the Board of Directors also listened to you, our shareholders, listened to your concerns, questions and suggestions.
Both the Board of Directors and the Executive Board of Nestle value your trust, your loyalty and your long term orientation. And it's with a view of continuing our long standing policy that the Board of Directors is proposing again a dividend increase. If you accept this proposal, which is made to you today, the dividend will increase to CHF2.45 per share. The total amount of the dividend that will be thus paid out to you will be CHF7.2 billion. This will be the 24th consecutive year that the dividend has increased.
Now I'd like to invite our CEO, Mark Schneider, to talk about your company's performance in 2018. Mark, you have the floor. Thank you, Paul. Good afternoon, ladies and gentlemen. Dear shareholders, let me also welcome you to our Annual General Meeting.
2018 was a successful year with our continuous efforts over the past years bearing fruit. Organic growth and profitability improved significantly. 2018 was also a very busy year. Nestle made some important decisions, all of which led to sharpening our strategic focus on food, beverages and nutritional health. We also had to make some difficult decisions, which affected our employees in many parts of the world.
Some of these decisions also affected Switzerland. We understand that these changes are a source of uncertainty for our employees and their families. I assure you that Nestle is committed to supporting its employees in a fair and respectful way. Nestle has always said that this was important, a matter of honor for it to do so. We are proud of our more than 300,000 employees.
I'd like to thank them, express my heartfelt gratitude to them for their dedication, passion and ability to innovate and adapt. And I thank them on your behalf as well, I'm sure. Thank you indeed. Now let's take a closer look at our financial performance in 2018. Results are good and in line with our expectations.
The group generated sales of CHF91,400,000,000 and achieved organic growth of 3%. Real internal growth was 2.5%. The underlying trading operating profit, which excludes restructuring costs and other items, amounted to CHF 15,500,000,000. This represents a margin of 17%, up previous year. Our net profit attributable to shareholders increased by nearly 42 percent to CHF 10,100,000,000.
This means earnings per share of CHF 3.36. Our net profit was supported by several exceptional items, including proceeds from the sale of businesses. Now it's important to note that we've also recorded a sharp increase in our underlying net profit, which excludes exceptional items. The improvement in our performance and operational efficiency supported these results. Free cash flow went up by nearly 15% to reach CHF 10,800,000,000.
This is mainly due to the increase in operating profit, improved working capital and disciplined capital expenditure. This substantial free cash flow has enabled us to return to you, our shareholders, CHF 13,900,000,000 in the form of dividends and share buybacks. Ladies and gentlemen, shareholders, as you can see, all your company's key financial performance indicators are positive. Our value creation model is clearly gaining momentum, and we're on track to achieve our objectives for 2020. However, we know that we still have a long way to go.
And therefore, we will continue to carry out our strategy with discipline and determination. Last year, Nestle significantly developed its product portfolio. We integrated activities with a strong growth potential, and we strengthened our Nutrition, Health and Wellness strategy. And in so doing, we focused on food, beverages and nutritional health. In 2018, we made acquisitions and divestments totaling nearly CHF 14,000,000,000.
Our most important transaction was certainly the acquisition of the license to market Starbucks coffee products outside of the company's coffee shops. We are delighted that this transaction was completed so quickly. The alliance with Starbucks has already strengthened our position in the global coffee sector. The new Starbucks brand capsules for our Nespresso system are, as of now, produced in our factories in Arbe and Avanghe here in Switzerland. In 2018, we also announced our intention to explore strategic options for Nestle Skin Health.
This unit has made significant progress over the past 2 years. But after careful consideration, the Board of Directors found that its growth opportunities are increasingly without the scope of Nestle's Nutrition, Health and Wellness strategy. Ladies and gentlemen, our main growth driver remains innovation. Each year, Nestle launches up to 1500 new products and proves the recipes of some 8,000 existing products. Innovation is a key factor in the long term success of your company, and that is why our research and development budget is one of the highest in the industry.
Our priority is to improve our ability to innovate and increase the impact of our innovations. I'd like to point out that most of our investments in research and development are made in the Lausanne region. Now let's look what's behind the numbers. Nestle has always believed the business must also serve the common wheel. Our principle of creating shared value for shareholders and for society dates back to our company's origins.
And this fundamental principle is something we apply to all our activities all over the world. First of all, we want to contribute to healthier lives. We want to particularly focus on children's nutrition. Lifelong eating habits are formed already in early childhood. Improving the nutritional profile of our products is at the heart of what we are about.
Therefore, our Nestle for Healthier Kids initiative brings together all our efforts in this area from reformulating our products to raising awareness about the importance of healthy eating for parents and children alike. We're also strongly committed to the communities in which we are present. Our Nestle Needs Youth initiative is an excellent illustration of this. With this initiative, we want to help 10,000,000 young people and help them access economic opportunities. This includes our support for young farmers as well as all we do to improve rural development.
Finally, we are strongly committed to the environment. 1 of the most urgent environmental challenges is that of packaging waste, in particular, plastic related waste. In April 2018, we pledged to make our packaging fully recyclable or reusable by 2025. We've also created our Institute of Packaging Sciences right here in Lausanne. In January 2019, we announced a series of specific measures that are based on 3 pillars: First, to phase out all non recyclable or hard to recycle plastics and to replace these with alternative materials that are recyclable or even biodegradable.
We are also developing new distribution systems for our products with reusable packaging to reduce single use packaging. All the options that we are considering must, of course, guarantee the safety and quality of our products. 2nd pillar is to achieve a waste free future. In Asia, we're involved in projects to prevent the further accumulation of plastic in nature and in the oceans. The 3rd pillar is to promote good behavior, starting at home.
For example, we've already taken steps to eliminate non recyclable single use plastic items in all our facilities worldwide. June 8 is World Oceans Day. And to mark this occasion, Nestle employees around the world will take part in beach cleanup operations. Management and employees of the group's headquarters here in Switzerland will take part in the cleanup of the Lake Geneva shore 2 weeks later. Solving the problem of plastic waste requires large scale, well coordinated and long term efforts.
There is simply no single or easy fix. Nestle creates shared value in all sorts of ways, and the fight against deforestation in our supply chain and the preservation of water in our operations are important examples. Creating shared value is and will remain the way in which Nestle does business. Paul Balko will come back to this point later. Ladies and gentlemen, Nestle is committed to continuing to work on innovation, growth, efficiency and sustainability.
This is how we will position Nestle for sustainable success in the future for you, our shareholders, and for society at large. Thank you for listening.
Thank you, Marc. Ladies and gentlemen, distinguished shareholders, as I already said earlier on, the world is facing profound changes. The global population could reach €10,000,000,000 by 2,050. And that, in a context of high urbanization, population aging, migration and constantly shifting geopolitical and economic power relations. Producing enough high quality food with the right nutrients in an environmentally and socially sustainable manner presents significant challenges.
It requires a fundamental rethinking of our food production and consumption patterns. The first challenge is the double burden of malnutrition. Some populations consume excessive amounts of food, resulting in large numbers of people who are overweight or even obese with the associated diseases such as diabetes and cardiovascular disease. Other populations do not have access to the quantity and quality of food they need with micronutrients such as vitamins, iron, calcium or zinc often lacking. It's estimated that more than 800,000,000 people in the world are still not getting enough to eat today.
The second challenge is food waste. About onethree of the food produced in the world is unused or discarded. We urgently need to reduce this waste throughout the value chain. From the production of agricultural raw materials to the consumption of finished products. The 3rd challenge relates to the impact our food has on the environment.
We must develop production methods that are more respectful of natural resources, including water and soil. We must also adopt a diet that generates less CO2 and less waste, including waste from packaging. And we must cultivate new sources of protein, especially from plants, if we want to be healthier and have a more sustainable food supply. And then the 4th challenge is to accelerate the development of scientific knowledge, in particular that of nutritional science. This will allow us better to understand the complex relationship between our food, our genes, our lifestyle and health.
And we will also be able to develop targeted and personalized products to enhance quality of life at every stage. The future of food, ladies and gentlemen, and its effects on health on the environment is therefore a major challenge in the years ahead. It is also a huge opportunity, and Nestle is ideally positioned to seize it. Your company has the expertise, the capacity, the size and the determination to help address these challenges of tomorrow. We believe that Nestle can make a positive contribution and be part of the solution as it has done in the past.
We're also convinced that Nestle we're also convinced that Nestle must be part of the dialogue with all the other stakeholders, 1st and foremost, of course, with consumers, but also with governments, international and nongovernmental organizations, academia and also civil society. We are proud of NESA's ability and willingness to be a positive force in society, a force that is committed to making a difference, a force for progress. In this context, our Nutrition, Health and Wellness strategy is more relevant than ever, as I already mentioned. It is at the very heart of people's concerns and needs. It is central to solving the challenges we face to ensure sufficient, healthy and sustainable food for the future.
Our strategy is inspired by the purpose that has driven Nestle for more than 150 years, namely to enhance quality of life and contribute to a healthier future. Our purpose is also more relevant than ever. It inspires us, guides us and motivates each and every one of us every day. Our purpose is based on a strong conviction. We want to leave our children a healthier, happier and more sustainable world than the one today.
It is this purpose and conviction that make Nestle a unique company, a company that has established the creation of shared value as a fundamental principle of how it does business value for you, our shareholders, but also and at the same time, value for society at large, the communities we live in, for individuals and families, the communities in which we operate and for our planet. We believe that this is the best way to develop our business in the long term and in full harmony with the world around us. Our initiatives to support children's health, young people's futures, rural development, sustainable water management, diversity and inclusion in our company are some examples, only a few examples of our actions. In 2018, we also stepped up our efforts to improve our packaging and reduce the use of plastic and its impact. Our specific actions demonstrate our strong commitment to these issues.
Nestle has always been focused on the long term, and we maintain this focus even when a few years ago, short term models were in vogue, all the fashion models based excessively, sometimes even exclusively, on cost reductions and healthy and profitable growth. Nestle has always advanced knowledge development in Novotik Technologies, new products. We've invested in our brands. And last but not least, we've invested in skills and education of our employees. And we'll continue to do so to ensure Nestle's long term development and performance while maintaining high intensity in the short term.
That is why Nestle needs 1st class corporate governance, beginning with a 1st class Board of Directors, a board whose principal responsibility is to ensure that Nestle remains healthy a board that has an accurate assessment of the environment in which Nestle operates and asks the right questions. We pay particular attention to the composition and renewal of our Board of Directors. We aim to always have the right balance of diversity, experience and perspectives to be able to understand and anticipate the changes affecting our industry and our world. Our directors look after the good of Nestle and protect your interests, dear shareholders. It is in this spirit that we have called on and you have elected 7 new independent directors since 2015.
And it is also the reason why today we are proposing 2 new candidates who, if elected, will bring their vast experience to the board and to Nestle. Ladies and gentlemen, shareholders, a company like ours is an integral part of the community in which it operates and exists. It must therefore commit to and express its views on important issues. I'd like to address a point that was already raised last year because it is a subject that is of concern to me. It's the responsible business initiative here in Switzerland.
It's an initiative which, in our opinion, is well intentioned but ill conceived. Nestle is a responsible company. We firmly believe that a company like ours must respect human rights and protect the environment. These are principles that we apply all over the world always, but we're also convinced that it is concrete action, specific action on the ground that makes a real contribution, not an unprecedented constitutional article like the one proposed. It's unprecedented.
We actively supported efforts to develop initiative and result in its withdrawal. Unfortunately, our efforts were in vain. Now if the initiative or a similar counterproposal were to be adopted, that would mean that companies based in Switzerland would be forced constantly to prove their innocence. Our country's courts would, in a way, become the world's police force, and this seems to us inappropriate and counterproductive. And let me repeat, Nestle is a responsible company, not out of obligation, but out of conviction.
Dear shareholders, before concluding, I would once again like to salute the women and men who work in your company day after day. It's also for them that we must have the proper strategy. It's for them, too, that we must have the ability to make informed decisions and have the right values rooted in respect. This is what guides us and our employees because it is people who make a difference. And you, our shareholders, you allow us to do so.
We are committed and determined to further developing Nestle and creating value for you and for society at large. The competitive environment in which we operate will remain very intense and challenging in the future. We are prepared for this. We'll continue to evolve NESLE to ensure that it remains relevant and competitive on the cutting edge without any complacency, we remain on our toes. We appreciate your support and your trust, your attentiveness, your input.
We wish to continue our dialogue with you. Above all, we want to continue to reward your loyalty and your long term orientation through our performance. On behalf of the Board of Directors and the Executive Board, I would like to thank you, ladies and gentlemen, our shareholders, for your trust and your commitment to Nestle. Thank you for your