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Last Updated: Thursday, 23 February 2006, 12:42 GMT
Coffee sales drive Nestle profits
Nestle Chief Executive Peter Brabeck
Mr Brabeck will quit his chief executive role in 2008
Price increases and sales of Nespresso coffee have helped Nestle to report record net profits in 2005.

Net profit at the world's largest food group increased 21% to 7.995bn Swiss francs ($6.11bn; 3.5bn).

The company, maker of KitKat bars and Nescafe coffee, said oil costs and a volatile political environment may affect business during 2006.

Meanwhile chairman and chief executive Peter Brabeck said he intended to step down as chief executive in 2008.

Group sales rose to 91.075bn Swiss francs, up an underlying 6.2% from a year ago. Sales of the high margin Nespresso coffee rose an underlying 36.2%.

Hedged on sugar

Announcing the financial results, Mr Brabeck said that commodity cost increases should slow this year.

The firm said it was "well covered" on hedging for sugar prices this year, which have soared recently.

"The prices from raw materials coming in 2006 will be much less than those coming in 2005," Mr Brabeck said.

Meanwhile Nestle said it had stepped up safety measures for workers in close proximity to live animals in response to bird flu concerns.

Nestle makes chicken stock cubes under the Maggi brand name.

But it said the virus posed no danger to customers.

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