SWISS food group Nestl blamed higher costs and the weak dollar for a challenging year during which net profits fell 18 per cent to 6.2bn Swiss francs (£2.66bn).

Nestl, which makes Nescafe coffee, Kit-Kats, Rolos, Polos and other confectionery favourites, said it had faced an adverse economic and political environment that included "powerful currency headwinds" for the third year in succession.

But despite a 7.6 per cent reduction in sales due to the strong Swiss franc, and a 1.3 per cent fall in total sales to 87.9bn Swiss francs (£37.7bn), Nestl said all its trading areas saw growth.

The company took over Rowntree's of York in 1989.

The plant has been the subject of controversy in recent months, with 150 process jobs and 220 technical posts lost as part of a cost-cutting drive.

The company also announced plans to introduce a lemon cheesecake flavoured Kit-Kat in an attempt to bolster sales, which fell 9.1 per cent from £104.8m to £95.2m in the 12 months to last October, according to analyst Information Resources.

Nestl, based in Croydon, has a number of other sites around the UK, including one in Halifax that makes Quality Street chocolates and Easter eggs.

Besides confectionery and coffee, Nestl makes products including Buitoni pasta, Perrier mineral water and Ski yoghurt.

The company's cost-cutting drive, designed to save four billion Swiss francs (£1.71bn) in the next three years, boosted margins in 2003