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Nestlé plans to sell underperforming brands

By Caroline Scott-Thomas+

02-Oct-2013

Nestlé plans to sell underperforming brands

Nestlé CEO Paul Bulcke told an investor meeting on Tuesday that the company intended to divest some of its brands and shake up its portfolio.

Without naming any specific brands, Bulcke said the company had drafted lists of businesses for possible divestment as well as for those that needed fixing, which had been “sailing under the radar screen for too long without being part of the party.”

“Divestitures, we are going to have some,” he said. “…We want to be in business, not in agony.”

Bulcke said: “There is a shortlist...the shortlist for fixing is slightly longer than ‘getting rid of’. We are business people. We want to be in business, not getting rid of business.”

His comments come in the wake of speculation last week that the company’s PowerBar brand was up for sale, although Nestlé declined to comment at that time on the rumour. The company did say in August that it was “actively looking” at its portfolio to weed out poor performers after posting its weakest quarterly revenue growth in four years.

Bulcke said Nestlé had already been talking about a slowdown in emerging markets for about a year – adding that it is not something that happens overnight – following Unilever’s announcement earlier this week that a slowdown in emerging markets would hit its profits.

He also said that a slowdown in emerging markets was “to a certain extent healthy”. When a country like China grows in double digits for several years in a row, it “overheats the engine”, he said.

Bulcke also declined to comment on speculation that the company intends to sell its 30% stake in L’Oreal, although he did say that all options were on the table.

Nestlé’s share price fell 1.6% to €62.10 in morning trading.