UN Unilever NV

Nestle SA (NESN.VX) Thursday maintained its growth targets despite expectations of a tough year ahead as it reported a drop in net earnings, as expected.

"In view of continuing economic uncertainties and volatility, we don't expect 2012 to be any easier than previous years," Chief Executive Paul Bulcke said. Nestle said it expects consumers to cut back spending though it would continue to invest to drive growth.

"We are therefore well positioned in 2012 to deliver the Nestle model of organic growth of between 5% and 6% as well as an improved margin and underlying earnings per share in constant currencies," Bulcke said.

Net profit fell to 9.49 billion Swiss francs ($10.25 billion), beating forecasts for CHF9.35 billion but down significantly from CHF34.23 billion in 2010 when earnings included a CHF24.54 billion gain from its Alcon eyecare business which it sold to Novartis AG (NVS).

Sales fell to CHF83.64 billion from CHF93.02 billion a year earlier.

Like many consumer goods companies, Nestle has seen earnings growth slow in mature economies, where shoppers' income is under pressure from tax hikes and public spending cuts, rising unemployment and below-inflation pay rises. Earlier this month, Anglo-Dutch rival Unilever PLC (UL) warned of a tough year ahead in a struggling global economy marked by low demand in Europe and North America but growth in developing markets.

Nestle, maker of Nescafe coffee and Kit Kat chocolate bars, said it was well positioned to overcome a downturn through its investment in innovative products which covered all segments of the market, from its ultra cheap popularly positioned products to luxury products like Nespresso coffee capsules.

The company's organic sales growth, which excludes currency fluctuations and the effects of divestments and acquisitions, was 7.5%, better than Nestle's long-term target range of 5% to 6%. Nestle said 3.9% came from increased volume, with the remainder coming from higher pricing.

The company proposed a dividend of CHF1.95 a share, up from CHF1.85 a share for 2010.

Nestle shares closed Wednesday at CHF54.45, valuing the company at CHF179.7 billion, up 10% in the past 12 months.

-By John Revill, Dow Jones Newswires; +41 43 443 8042 ; john.revill@dowjones.com

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