By Jamie Barrie N estlé’s share price saw a boost recently despite the fact the company is reporting the slowest first-half sales growth since the deep recession of 2009. This is usually not the case, but the reason behind it is that investors believe that tougher conditions are on the way and incoming CEO, Ulf Mark Schneider will have to make some big changes at the largest food company. Schneider’s comes to Nestle from Fresenius where he was the CEO of the over $30 billion global health care group and Europe’s largest publicly traded healthcare provider. Schneider’s background fits perfectly with Nestle’s increasing focus on health and wellness.
Whatever Schneider’s plan is, you can be assured that it will be a healthy alternative for investors.
Many feel that Nestle’s confectionery unit will be a prime target for the CEO to implement change as very few of the products that once delivered strong revenues are performing well. Also making this segment a prime target for chance is the much-discussed sugar tax that many government officials have been using as an election platform and as this topic continues to gain popularity it may soon become a reality. Another division that Schneider may have his eye on according to experts is Nestle’s U.S. frozen food division with some speculating that the division may even be sold. Previous changes in the company have dealt with the organization’s non-U.S. ice cream division but the domestic line still needs to be dealt with. It is expected that Schneider will look to capitalize on the health food division. Given his background many feel he can find a way to boost what has been an underperforming segment. Nestle is taking the lead in some market categories such as price-to-earnings ratio. Some stock analysts feel that it might be trading at a premium. The discussion of restructuring has prompted many to jump on board. This may be premature until Schneider’s actual plan has been put on the table.
Whatever Schneider’s plan is, you can be assured that it will be a healthy alternative for investors.
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OCTOBER 2016 • SPOTLIGHT ON BUSINESS
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