October 1, 2013 / 11:55 AM / in 6 years

UPDATE 1-Nestle closer to getting rid of bad brands - CEO

By Martinne Geller

LONDON, Oct 1 (Reuters) - Nestle hinted on Tuesday it was getting closer to disposing of bad brands and shaking up its portfolio to deal with businesses that have underperformed for too long.

The company’s chief executive Paul Bulcke told investors Nestle had drawn up lists of businesses that could be fixed and those that could not.

“Divestitures, we’re going to have some,” Bulcke said. “We want to be in business, not in agony.”

“The shortlists are there and now the action has to come. The timelines have to be wise, but action will come,” he told a presentation to investors, stressing that managing the portfolio was a top priority.

Without identifying specific brands, Bulcke said some had been “sailing under the radar screen for too long without being part of the party.”

Suggesting the process is already under way, sources told Reuters last week that Nestle’s PowerBar energy bars were up for sale.

Nestle’s performance in recent quarters has lagged some peers, in part because of the company’s mammoth size and multiple brands, from Gerber baby food to Perrier water to Nescafe coffee to name only a few. The company posted 92.2 billion Swiss francs in annual sales last year and has 203.81 billion Swiss francs ($225.16 billion) in market capitalization.

Bulcke said other priorities included structural efficiency and scaling back capital expenditure. Moving ahead, Nestle’s capital expenditure should be around 4 percent to 5 percent of sales, he said, below 2012’s 5.8 percent.

After consumer goods rival Unilever warned on Monday of a sharper slowdown in its emerging markets, Bulcke acknowledged that sales in the region were slower than before, but added that growth was more stable than before. A degree of slowdown was healthy, he said, given that the double-digit rates in some markets, like China, was unsustainable.

Bulcke declined to comment on Nestle’s plans regarding its closely-watched 30 percent stake in L’Oreal beyond repeating that all options were on the table. Restrictions on selling the stake expire in April.

Nestle shares were down 0.6 percent at 62.85 euros at 1122 GMT.

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