Ladies and gentlemen, before I come to the agenda, I'd like to share with you a few personal considerations to do with 2013 and also the 1st months of 2014. In which your company is active. In Switzerland, amendments to company law have had a direct impact on your company. Difficulties experienced in the Middle East, Asia, Africa and Latin America have contributed to a general slowdown in growth rates in emerging markets, while in the developed markets, growth has been anemic at best. Once again and despite this challenging backdrop, Nestle posted solid growth in all areas of activity improving its margins and increasing its underlying earnings per share.
Our CEO, Paul Bulker, will present the operational performance of your company in more detail, in line with our long term policy of ensuring an attractive return for our shareholders, the Board of Directors is proposing a further dividend increase to CHF2.15 per sheath all over the world. I would 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 for all the hard work that has been accomplished. Thank you
indeed.
And I would now like to hand you over to your CEO, Mr. Paul Boolke.
Peter? Thank you, Peter. Good afternoon, ladies and gentlemen. Dear shareholders, each year is challenging in its own way and this was certainly the case for 2013. Indeed, it was in a a difficult trading environment that our company delivered a solid set of numbers with all geographic areas and all categories contributing.
We again achieved growth in both emerging and developed markets. Our total group sales amounted to CHF92.2 billion with organic growth of 4.6%. Our trading operating profit was CHF14 1,000,000,000 with a margin of 15.2%, up 20 basis points. The group delivered a net profit of CHF 10,000,000,000 and our earnings per share were CHF3.14 Our operating cash flow continued to be strong at CHF15 1,000,000,000. This is a strong performance in the current environment.
I would therefore like to pay tribute to our 333,000 employees around the world, many of whom experienced the difficult challenges firsthand. Their talent, their creativity, their discipline and their commitment are key to delivering our results. And I would sincerely like to thank them on behalf of all of you. Thank you. Thank you.
Ladies and gentlemen, the results in 2013 showed our determination to grow your company profitably and sustainably even in an environment of slower growth. To deliver the Nestle model of average organic growth of 5% to 6% together with improvements in our trading operating profit margin and earnings per share in constant currencies and in our capital efficiency. Indeed, our average organic growth has been 6.1% over the last 10 years. The actions we took last year reflect Nestle's focus on both our shorter term performance seeking to grow faster than the market and the longer term. In other words, making the right decisions to ensure sustainable and profitable growth into the future.
Thanks to our road map, our employees, wherever they are in the world, are aligned behind our strategic directions to be recognized as a leader in nutrition, health and wellness,
trusted by all
accelerated our innovation and ensured our pricing was sensitive to consumer needs. These proactive efforts and our determination to grow Nestle have enabled us to outperform the market again in 2013. But so fast, this is not enough. It requires an intense focus on ensuring we maintain our competitiveness in the market. On ensuring we continue to grow strongly in the future.
That is why we identified a set of priorities which are driving concrete actions in many areas of our business. And where we want to invest is for Nespresso, Nescafe Dolce Gusto and Pet Care. On the other hand, we decided that our personalized weight management business Jenny Craig and our Performance Nutrition PowerBar would be better served by precisely. Move Fast 13, we invested in capacities, capabilities, research and development and brands at levels that are not only among the highest in our history but also in the industry. The opportunity for us now is to exploit that investment to do more with less to further leverage our assets, our scale and our capabilities.
This will result in lower capital investments and more efficient structures. Finally, we are looking at how we can work in a smarter way, more efficiently to deliver greater value for consumers and for you, our shareholders. Nestle's size and global presence give us many advantages. We now have to really exploit this and create further scale benefits and increased competitive advantage. These are the types of actions that we are taking to ensure we will continuously reinforce our group and continue to deliver strong results over time.
And then there is how we go about our business. So we fundamentally believe that our activity should have a positive impact on society every day, everywhere that they should create shared value. To prosper, we need to have a long term view set on a robust series of principles and values that are based on respect, respect for people and diversity, respect for the environment and respect for the world we live in. Our approach is increasingly better understood and recognized around the world. Nestle is for instance included in the FTSE For Good index holds the number one spot in Oxfam's behind the brand scorecard and for the first time is the leading food products company in the Dow Jones Sustainability Index.
These are recognitions that we should be proud of that motivate us to continue our efforts to be an exemplary corporate citizen. We will continue to measure and identify the ways we connect with society at large and be sensitive to what is expected from us. Ladies and gentlemen, Nestle's Our approach based on permanent innovation through science and R and D is clearly reflected in our offer of day to day food and beverages. We reinforced this strategy by extending the boundaries of nutrition with Nestle Health Science. And now with the setting up of Nestle These are important steps for our group and offer us other interesting growth platforms for the future.
Our Chairman will elaborate on this a little later. Ladies and gentlemen, I can confidently say that Nestle is ready to face the headwinds which await us in 2014 and beyond and to grasp at the many possibilities this changing world has to offer. Our company has the right mindset and the right structures. We have the right action plans in place to deliver solid results in the short term and in the long term. And above all, Nestle has the right people.
Each and every one of us shares and pursues a common goal to continue to make Nestle the world's leading nutrition, health and wellness company. On this note, I would like to give the floor back to the Chairman. Thank you for your attention. Merci, Paul.
Thank you, Paul. Ladies and gentlemen, our general meeting today is the first to be held in accordance with the new Swiss legislation relating to corporate governance that came into force in 2014. You will see the effects of this new legislation throughout the course of this meeting. And I will come back to the topic when we reach the corresponding agenda items. You will notice first of all that legal aspects have become far more pronounced and far more important with an agenda that now comprises 25 items for voting, we have been obliged to reorganize the meeting.
You have to bear in mind that failure to comply with the rules of governance in Switzerland will in future be a criminal offense. And Switzerland is the only country in the world that has passed such a law, nowhere else but in Switzerland. While we naturally respect the wishes of the Swiss legislators and will implement these changes. What concerns me today in addition to the technical aspects are the potential long term effects of this new law. The new legislation will have a significant impact on the covenants of your company.
Certain consequences were foreseeable to my mind such as the increased influence of shareholders I. E. You also in relation with the compensation or the great accountability of the Chairman and members of the Compensation Committee who will in future be elected directly by you the shareholders. Other consequences shareholders and proxy advisers. In our case, in Nestle's case, almost 2 thirds of our shares with voting rights are held by persons who are domiciled outside Switzerland.
Therefore, for most of the Swiss multinationals, the new legislation will mean a not insignificant transfer of power abroad. What is more, the members of the Board of Directors will from now on be elected on an annual basis. This means that all board members will be able to choose to step down or all could be replaced at once, whatever the year. As a result, the level of volatility would increase. Besides, this transfer of power from the Board of Directors to shareholders and the annual elections will encourage a short term perspective.
Only the Board of Directors has a fiduciary obligation towards our company and only the Board of Directors is legally liable for its long term success. Shareholders are free to pursue their own interests and to adopt a short term vision in a way that suits them. They may even be competitors in our room and they are our shareholders nevertheless. This being said, we should not forget that Nestle's success story, which stretches back almost 150 years, is based on solid long term commitment. As a result, we are going to reinforce our communication with all shareholders and other stakeholders who, like you, at least I hope so, would like to ensure the continued success of our company.
And in our efforts to engage with our shareholders, we must guarantee an equal and fair treatment of all the shareholders, be they Swiss nationals or not. With the new legislation, it is easy to imagine a situation in which the Chairman could be tempted to choose his undertakings in a way that secures the votes of major investments who are key to his reelection whilst neglecting his commitment to the small shareholders. This is not going to happen at Nestle. Ladies and gentlemen, we have adapted our articles of association to the new legislation in a way that should avoid any unintended consequences as far as possible of the the competitiveness of our company, your company. The most important question posed by our shareholders throughout the world regarding the consequences of the Minda initiative has been whether we will remain competitive and whether we will continue to be able to recruit the best people in the world.
Our answer to that is quite clear. To do that, we need transparency and we need legal certainty. For the say on pay voting system and comparison for example, our proposal of voting on a budget is the best in our view. Only this system will enable us to tell the management team that payment of both their base salary and their bonus for the the suggested by many would bring considerable uncertainty. But we will also continue to hold a consultative vote on the remuneration report on the compensation report.
So if the Board of Directors were to abuse the trust of shareholders in relation to the vote on the budget, shareholders would have the possibility to reject the compensation report a posteliori in a consultative vote and to vote at the same time bindingly against the compensation budget of the following year. In this way, the general meeting, I. E, yourselves, ladies and gentlemen, would have real control of all the elements of the compensation of the Board of Directors and the Executive Board. And you will be in a position to express yourselves three times on this subject. The first time when approving the budget, the second time when voting the compensation report and the 3rd time when approving the budget of the following year.
Three times you will have the possibility of expressing your views, a posteriori. Ladies and gentlemen, our new articles of association will enable us to maintain the stability that we need for our company to function and ensure our competitiveness. This stability is what has always been one of the greatest values and virtues of the Swiss legal system. Country and the companies based here. Country and the companies based here.
To achieve this, we need the active support of all the shareholders who like us want Nestle to be successful over the long term in accordance with the pledge that we have in our articles of association and I quote, Nestle shall in pursuing its business purpose aim for long term sustainable value creation. That is what is in our articles of association, ladies and gentlemen. Your company is one of the most international or globalized companies in existence. Its activities, its shareholders, its employees and its management are spread all over across the world. And even though if the volume of sales generated in Switzerland accounts for less than 2% of the group's turnover, Even though shareholders domiciled outside Switzerland hold more than 2 thirds of the shares And even if we increasingly feel that we are pushed to the outside, Switzerland continues to play a significant and strategically important role in Nestle's operations.
I'd just like to remind you that over the last 10 years, we have invested close to CHF3 point 4,000,000,000 here in Switzerland, investments which have made it possible to create 3,900 new jobs in this country. Here in Switzerland, every built in Romand, which will create a further 400 new jobs in Switzerland. More than 60 like to add that Nestle is focusing on Switzerland in its strategy for the future. The new company Nestle Health Science S. A.
Has its headquarters in VEVE, while the new Nestle Institute of Health Sciences is based in the campus of the Ecole Polytechnique Federale de Lausanne. The recently announced Nestle Skin Health will develop within an international company, Golderma S. A, with its headquarters in Lausanne. These long term strategic decisions were made primarily because of the trust and the confidence we have in this country, the certainty of its legal system, the quality of the economic and social conditions that prevail here and its political stability. In Switzerland, we employ staff from more than 90 countries from factory workers to the world's most well known experts.
And ladies and gentlemen, we need to be able to hire them and bring them here from everywhere in the world without restrictions or waiting times. Close to 80% in value of our access to the European market is vital to our industrial activities in Switzerland and for the jobs associated directly or indirectly with all these activities. In the past, the economic and governance model of Switzerland ensured levels of prosperity and stability that were envied throughout the world. However, recent political decisions, In particular, the referendum of February 9th on immigration have led us into period of uncertainty. Of course, we respect the decision of the Swiss people.
And personally, and I've said this time and time again, I can well understand the emotions and the real fears of many people who live in this country. I do not believe for my part that the result of the ballot on February 9th was a vote against the bilateral agreement signed with the European Union or against the opening up of Switzerland, but rather a wake up call that this openness, this generosity of the Swiss people were being abused, which was not sufficiently recognized, acknowledged and tackled by politicians. I remain a fervent between purely ideological issues and the real fundamental questions and has always made its decisions with a lot of wisdom. We will now closely follow the negotiations undertaken to translate the new article of the constitution into implementing legislation. And we are confident that practicable 2018 was also an important year in terms of the strategic development of your company.
During the course of several meetings, your Board of Directors drafted and approved the broadening of the long term strategic Health Science SA and the Nestle Institute of Health Sciences has reinforced the strategic direction with the aim of helping consumers to live a more healthy life through nutritional solutions, food and beverages, as well as scientific products intended to improve the quality of life. Our contact with consumers, however, have shown us that consumers are taking an increasingly holistic approach to health. One way is therefore expanding its activities to include the specialized area of medical skincare. Nestle Skin Health SA, the new wide range of products that will function as the founding base of an acquisition that is currently in the final phases of approval by various authorities and Goldermo will be integrated into the Nestle Group as a wholly owned subsidiary, but with its own Board of Directors. Nestle will thus acquire a new platform of considerable size for profitable growth.
And as we have already announced in detail, once the financial 23.29 percent 23.29 percent compared with 29.43 percent today. So naturally, this shareholding is a financial shareholding. But and I repeat this once again, it's also a strategic shareholding with a long term focus. Ladies and gentlemen, Nestle as the world's leading consumer goods company, Nestle must adapt continuously to new needs and new consumer demand. Today, consumers are not the consumers of the past.
While this does not mean that there are no longer any great development opportunities to be found in food and beverages. You know that if you want to secure a company's leadership over the long term, it is vital that you listen carefully to customers and consumers and where possible to anticipate future trends. Listening to the consumer also means being reactive to the expectations of society as expressed through the media, NGOs, governments, etcetera, and increasingly the private sector. And large companies such as ours in particular are being called upon increasingly to contribute to finding solutions to all kinds of problems facing society today. And we have a duty, a duty to take up this challenge.
And this is precisely what we are about and what we do. The first step towards social commitment is always to create transparency. Our efforts to be an open and transparent company have been recognized by a number of observers, including some highly critical ones. And Nestle occupies the 1st place in various important consistent communication. The annual report you hold in your hands meets again the most demanding requirements, I.
E. Level A plus of the Global Reporting Initiative. Our commitment is expressed in concrete actions often with partners in civil society in areas in which we can really offer solutions, whether we're talking about improved nutrition, rural development and responsible sourcing, efficient water use, environmental sustainability or respect for human rights. Transparency and commitment. 7 years ago, we formulated the principle of the importance of creating shared value that guides us in our decisions and our actions.
It's by creating value for society as a whole that we will ensure our company's long term success. Ultimately, today Nestle is the largest consumer goods company in terms of sales and also in terms of market capitalization, which puts us among the world's leading companies across all sectors across the board. The recent strategic decisions I have just described, which have been carried out by your management in a rigorous and disciplined manner, have set your company on a clear path towards realizing its aim and ambition to be the world leader in nutrition, health and wellness. Nestle has a great future ahead of it. And I encourage you to play an active part in this future as our shareholders.
On behalf of the Board of Directors and myself, I would like to thank you, ladies and gentlemen, dear shareholders, for your loyalty and the commitment you have shown and you continue to show our company. You are more than ever more important to Essene and its success in creating long term share value. Thank you for your attention.