Nestle revamps water business as organic growth slows

17 Oct 2019 / 14:10 H.

ZURICH: Food group Nestle plans to return up to 20 billion Swiss francs ($20.13 billion) to shareholders over the next two years and is making changes to its struggling waters business after organic sales growth dipped to 3.7% in the third quarter from 3.9% in the previous quarter.

Packaged food makers are branching out into new areas like plant-based meat alternatives or products made from all natural ingredients to boost growth in an otherwise sluggish market.

Nestle's organic growth, which strips out currency swings and acquisitions, slowed in the third quarter as prices for its products fell slightly, the maker of KitKat chocolate bars, Maggi noodles and vegan burgers said in a statement on Thursday.

It did, however, confirm its outlook for organic sales growth of around 3.5% and an operating margin of 17.5% or above for the full year, pointing to strong momentum in the United States and its petcare business.

It said it had decided to distribute up to 20 billion francs to shareholders over the period 2020 to 2022, primarily in the form of share buybacks, but special dividends were also possible.

"Should any sizable acquisitions take place during this period, the amount of cash to be distributed to shareholders will be adjusted accordingly," Nestle said.

In a separate statement, Nestle announced it would no longer manage its waters business, which posted weak organic growth of 0.5% for the nine-month period, as a global business. It will instead integrate it into its three geographical zones.

Maurizio Patarnello, head of the waters business, will leave the executive board at the end of this year.

Nestle appointed Sanjay Bahadur, head of acquisitions and business development, to lead a new group strategy and business development function that should help identify internal and external strategic growth opportunities. - Reuters

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