just On Call: Nestle keeps eye on M&A opportunities
Nestle has said it will spend close to CHF5bn (US$6.9bn) on acquisitions this year
Nestle has said that it will continue to focus on merger and acquisition opportunities this year, with a focus on bolt-on deals.
Speaking on the firm's earnings call today (10 August), Nestle's CFO, James Singh, told analysts that the company will spend close to CHF5bn (US$6.9bn) on acquisitions this year. He added that, whilst refusing to be more specific, Nestle will be looking for opportunities globally.
"We have announced several major capital expenditure programmes around the world, primarily in the emerging markets where we are experiencing very good growth," Singh said. "So, that, of course, has always been a priority for us and this year we will spend close to CHF5bn.
"On M&A, there are deals that have been completed and ones we are working on," he added. "Unfortunately we will not give you any specific targets but we are looking for M&A opportunities all over the world, in the developed world, in the emerging markets and in categories that are of strategic importance to our future. We are focused on bolt-on acquisitions and that is what we will continue to do."
In May, Nestle Waters North America acquired the Sweet Leaf Tea Co from private equity firm Catterton Partners, and in April the group acquired a controlling stake in Chinese food and drink maker Yinlu Foods Group.
Singh added: "In our industry, I have seen a little more (M&A) activity this year than last. It's not just in emerging markets, but it's all over the world. We are going to be very discriminate in terms of what is strategically compelling and with good financial logic, and that's how we are pursuing these deals. Some we will win, others we may not, but that's how we have always conducted and executed our M&A strategy."
This morning, Nestle recorded a 22.7% fall in first-half profits to CHF41bn. Sales in the period amounted to CHF41bn, a 12.9% decline on last year.
Nestle's Waters division, meanwhile, saw sales climb by 8.6% to CHF3.37bn on the back of a positive performance in Europe.
Nestle's head of investor relations, Roddy Child-Villiers, told analysts that the water division's performance reflects "continued strong performances in many markets with appropriate brand support".
Child-Villiers highlighted double-digit growth and share gains in France and Belgium, and strong performances from the S. Pellegrino, Vittel, Acqua Panna, Contrex and Perrier brands. The unit also achieved double-digit growth in Asia and Latin America.
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