2017.
Shareholders, ladies and gentlemen, as you know, 2016 marked the 150th anniversary of the founding of Nestle, not far from here in Vevey. Today, we are still driven by the same spirit of innovation, quality and excellence as our founders, Arminisley and the Page Brothers. We are still guided by our values that are rooted in respect. We are still driven by our purpose, enhancing quality of life and contributing to a healthier future through which we create value for you, our shareholders. In 2016, your company achieved strong operating and financial results, placing it among the top performing companies in its industry, even if and I have to say this, even if the results were below our expectations.
They were achieved in a difficult and volatile economic and political environment in many parts of the world and in a deflationary environment, especially in Western Europe. These results, nevertheless, are further evidence of your company's resilience and its ability to adapt and grow its business sustainably and profitably while preparing for the future. We have indeed continued to invest in the future success of our brands, our innovation, our research and our employees. And we are also investing to further improve your company's operational efficiency. 2016 was also a crucial year to prepare for the future of Nestle.
With the appointment of Ulf Mark Schneider as Group CEO, your Board of Directors unanimously appointed a person who brings your company the skills, experience and know how it needs to face the future as a Nutrition, Health and Wellness company with confidence and also, I do hope so, with ambition. I should like to pay tribute to the fine work of our management team here at my side. I'd like to express my appreciation to Paul Bulker for his leadership of Nestle, not only in 2016, but for all of his 9 years at the helm of our company. And I would also like to commend the hard work and dedication of the 328,000 Nestle employees all over the world. I thank them all.
Thank you. Thank you for that. As I was saying, I thank them all on behalf of the Board of Directors and on behalf of every one of you. Dear shareholders, both the Board of Directors of your company and its executive board value your trust in them, your loyalty and your long term vision. Continuing our long term dividend policy, the Board of Directors once again proposes an increase of the dividend to CHF2.30 per share.
If you accept this proposal, ladies and gentlemen, the total amount of the dividend paid out to shareholders will come to over CHF 7.1 1,000,000,000. The return offered by our company's stock is 1st rate and is worth emphasizing, especially given the volatility of the financial markets and the foreign exchange rate situation. Since 1942, your company has never cut the dividend it pays its shareholders. For the last 21 years, to be precise, since 1995, the dividend paid out has increased every year. I would now like to hand you over to Ulf Mark Schneider, who's going to talk to you about your company's performance in 2016 and share his thoughts on Nestle's prospects.
Mark, you have the floor. Thank you, Peter. Ladies and gentlemen, dear shareholders, good afternoon. I'm very honored to be here today. Before commenting up financial performance 2016, I apologize for not continuing my speech in French.
I can assure you, however, that improving my knowledge of the French language is one of my priorities.
Dear shareholders, merci.
Thank you. That encouraged me to practice even more.
Last year, Nestle delivered organic growth at the higher end of our industry. It was, however, at the lower end of our expectations. We saw a solid improvement of our trading operating profit margin, and our cash flow grew significantly. 2016 was not easy, but our 328,000 employees around the world rose to the challenge. On behalf of all of you, I thank them for the commitment and dedication to Nestle.
Thanks to their hard work and accomplishments, we're well positioned for 2017 and beyond. I think this justifies a round of applause.
Now Thank you.
Okay. Now at our 2016 financial performance. Nestle Group sales reached CHF 89,500,000,000. Organic growth was 3.2% with real internal growth at a 3 year high of 2.4%. Our growth was broad based, highlighting the strength and resilience of our portfolio.
This growth is the result of our investment in innovation and R and D, in marketing support and in new distribution channels like e commerce, which grew almost 20% last year. It now represents nearly 5% of total group sales. E Commerce is only one of the highlights of how Nestle embraces digital technology. Our communication, marketing, services and new business models are more and more digitally inspired. In addition, we make our internal processes more efficient, thanks to digital solutions and tools.
In 2016, the group's trading operating profit reached CHF 13,700,000,000 or 15.3 percent of sales. This is a 30 basis points improvement in constant currency. We achieved this while investing in our future growth. Our net profit reached CHF 8,500,000,000. Underlying earnings per share grew 3.4% in constant currency.
This is at the lower end of our expectations, but we are working to address this. Our cash flow is at the top end of our industry and has been for many years. In 2016, operating cash flow improved by CHF 1,300,000,000 to CHF15.6 billion. Free cash flow improved by CHF200 1,000,000 to CHF10.1 billion or 11.3 percent of sales. This concludes the review of our 2016 financial performance.
Let me now share with you some of my perspectives on Nestle. Over the last few months, I have visited Nestle Organizations around the world. I have met our employees and learned about our business. I have seen for myself the many opportunities we have and some of the challenges we face. Above all, I have seen the intrinsic strengths of our company, the experience of our people, our strong brands, our industry leading R and D and innovation capabilities.
Nestle's success is built on its nutrition, health, and wellness strategy. It is now more relevant than ever as people around the globe want to lead healthier lives. They're interested in the role good nutrition plays in their personal health and well-being. Nestle is well positioned to support them in this. The strength and the depth of our research and development enable us to continuously improve the nutritional profile of our products while delivering great taste.
This includes, for example, lowering salt and sugar content or adding whole grains, vegetables or micronutrients. In addition to our Food and Beverage business, which is the core of our company, we're building 2 new health related platforms, Nestle Health Science and Nestle Skin Health. Now, when I look at the environment around us, I see an industry which is going through fundamental and unprecedented change. Many companies are focusing on radical cost cutting to deliver higher profits in the short term. They are, however, experiencing lower or even negative organic growth.
In our view, this approach is not sustainable. Meanwhile, start up businesses are capitalizing on trends towards more local, organic, or artisanal products. They innovate fast and respond swiftly to changes in the market. We at Nestle believe that sustained value creation is the result of both, growth and operating efficiency. These are my two priorities for the company.
Together with a healthy sense of urgency, they will ensure the continued success of Nestle. To generate growth, we're investing our fast growing categories and regions, in product and business model innovation, and digital opportunities. In today's environment, speed is of the essence. That is why we need to move quickly to capture fast changing consumer trends early and deliver meaningful innovation to the market. Where we experience lower growth, we are taking the necessary actions.
To free up the resources needed to support our growth, we continuously improve Nestle's operating efficiency. Our structural cost savings programs announced last year play an important role in this. Dear shareholders, continuity and change. These two words describe the way forward for Nestle. Continuity, building on the strong nutrition, health and wellness strategy of our company.
Change, increasing our speed and simplifying the way we work. I'm confident that Nestle has what it takes to be successful: a robust strategy, unparalleled global reach, industry leading expertise, and above all, our people, the thousands of colleagues around the world who make Nestle. I thank you for your commitment and for your loyalty to our company. Merci.
Thank you.
Thank you, Mark. Ladies and gentlemen, shareholders, we have just celebrated the 150th anniversary of the founding of Nestle while our sector is at a turning point in its history. Consumer expectations of Nestle are changing dramatically with evolving trends, habits and lifestyles. We are witnessing a reshaping of the competitive environment. We're on the eve of what could be called 4th Industrial Revolution, an unprecedented transformation of society full of challenges, but above all, full of great opportunities.
We live in times of profound change, turbulence and uncertainty. For the first time in decades, we are once again witnessing major geopolitical tensions. We are seeing the rise of populist tides with a corollary of withdrawal into isolationism and exclusion. Our societies are facing profound changes and a complete transformation of economic models, which are increasingly influenced by the rapid development of digital technology. Although the period of prosperity we have recently gone through has led to a huge reduction of poverty in the world, we are seeing increasing social tension, often linked to the unequal distribution of economic added value and wealth.
Economic activity, free trade and international trade, which are at the basis of a period of unprecedented value creation and prosperity, are now under threat. Against this backdrop and despite some remarkable progress, much remains to be done to eradicate poverty, the dual burden of over- and under nutrition, and thus, further improve the health of vulnerable populations. This is clearly part of the United Nations Sustainable Development Goals up to 2,030, which we fully subscribe to and actively contribute to. Ladies and gentlemen, throughout history, one of the great challenges facing humanity has been to ensure sufficient food for its survival and development. In recent decades, increasing agricultural yields and advances in the food industry's ability to provide safe, nutritious and affordable food have been important advances.
But the future of our food security faces important challenges. By 2,030, the rapid growth of the world's population, coupled with an increase in incomes, will boost demand for food by 35%, for water by 40% and for energy by 50%. More than twothree of the world's population will live in urban areas by 2,050. This will profoundly change patterns of food production and consumption. In addition, globally, 1 person in 3 is malnourished today.
For some, this malnutrition manifests itself in a lack of calories and a nutritional deficit. For others, this translates into an overconsumption of calories, which coupled with an increasingly sedentary lifestyle, leads to problems associated with being overweight and obesity and noncommunicable diseases linked to them. In some countries, this has already become the most pressing public health problem and the number one cause of death. It is therefore increasingly recognized that sufficient food production is no guarantee of food security. Today, and for the first time in the history of mankind, it is absolutely clear that in addition to a sufficient quantity, food production must above all offer better nutritional quality.
In future, the notion of nutritional security will be paramount. It is against this backdrop that the future of our company will be written, a future that Nestle is building to seize the enormous opportunities available for our company, its consumers and shareholders, you, our shareholders. We are investing in science and innovation to develop and promote the therapeutic role of Nutrition. We are innovating to provide personalized nutrition solutions that allow better health management and even the prevention or even cure of certain diseases. We continue to adapt our products and historical brands so that they actively contribute to a healthy and happy life for our consumers.
We are confident that we have the skills and knowledge to offer our consumers the healthiest but also the most flavorful choices in each of the product categories we operate in. We are rapidly adopting new technologies, not only for the innovation of our products, but across all of our activities to innovate better, to increase efficiency, to communicate better and to better interact with the world around us. Growth, ladies and gentlemen, growth is and will remain the best way to create long term value in the future, long term value for you, our shareholders, at a time when we're seeing more and more consolidation in our field of activity and in our industry, at a time when some of our competitors are making drastic cost cutting their main or even sole priority, it is important to reaffirm Nestle's drive to create value through growth, growth that is sustainable and profitable. It is clear that in order to be able to invest for growth, particularly through innovation and renovation, we will have to increase our operational efficiency to free up the resources we need to sustain the growth of our brands. Change and reassessment will be the challenges that Nestle will be able to meet.
Nestle has the human technological and financial capabilities to continue to grow and create value, both for you, our shareholders, and for society at large. This is what Nestle calls creating shared value. Finally, I would like to highlight the quality of our teams and our people at our headquarters and in our markets, on our governing bodies and throughout the company, in Switzerland and around the world. Nestle employees have made and will continue to make a difference in future with their skills, know how, commitment and passion. I express my full confidence in the team that will lead your company into the future.
Together with Mr. Paul Boolke, who is now the proposed Chairman of Nestle Group Mr. Ulf Mark Schneider, CEO of the Group and finally, with the Executive Board present here at my side, Nestle's future and success are in the hands of experienced professionals and an able and committed team. With a strong sense of purpose that drives them and the strong values that guide them, all Nestle employees will know how to drive your company to the results that you have a right to expect. Leaving Nestle with such extraordinary human capital is what I am most proud of.
Before concluding, I would like to sincerely thank the Board of Directors for their commitment, their expertise and their support. I would also like to thank you, the shareholders, for your loyalty and your commitment to Nestle. Over the past 20 years, I've had the honor and the pleasure to lead and then to chair our wonderful company. During all these years, you have shown me your support and confidence. I sincerely appreciate it.
Thank you for your attention.