By Matthew Boyle
Nestle SA, the world’s biggest food company, has a short list of businesses it is looking to sell after identifying laggards that it cannot fix, Chief Executive Officer Paul Bulcke told investors on Tuesday.
The company has completed a review of 97 percent of its 1,800 distinct business units, Bulcke said at an investor seminar at Nestle headquarters in Vevey, Switzerland.
There is a “slightly longer list” of units that the company will try to improve, he said, as it seeks to rebound after posting its weakest quarterly revenue growth in four years.
“We are going to have some divestitures,” Bulcke said, without disclosing any further details or timing. “We have allowed underperformers to underperform for too long. That is not the case anymore. We will go after them. We want to be in business, not agony.”
Analysts have cited Jenny Craig diet centers, PowerBar energy snacks and Lean Cuisine frozen meals as possible candidates to be jettisoned.
In Solon, Nestle employs about 1,975 of its nearly 2,500 Ohio workers. In Solon, workers produce Stouffer’s and Lean Cuisine frozen meals as well as frozen items for Nestle’s professional sister business, said Roz O’Hearn, communications and brand affairs director. In Solon, workers also manage several brands, including Stouffer’s and Lean Cuisine frozen entrees; Buitoni refrigerated pastas and sauces; Hot Pockets and Lean Pockets frozen sandwiches; Nestle Toll House baking ingredients and refrigerated cookie dough, Libby’s 100% Pure Pumpkin and Nestle Carnation milks.
Nestle also just broke ground this summer on a $53 million new product technology center for frozen foods for the company, she said.
O’Hearn said she could not comment on any speculation about what brands may be sold by Nestle.
In a presentation Monday, Luis Cantarell, head of Nestle’s $11.8 billion nutrition and health-care businesses, said that both Jenny Craig and PowerBar were in “suffering” categories.
Bulcke also said he plans to limit spending on capital such as factories to between 4 percent and 5 percent of sales next year. In August, Nestle said 2013 capital spending would be “slightly lower” than its forecast of about 5.7 percent of sales.
“Over the last three or four years we have increased our ‘cap-ex’ quite extensively,” Bulcke said, in order to expand in emerging markets.
In some cases, a slowdown in emerging markets could be “healthy,” Bulcke said at the seminar.
“When China or another country grows 15 percent for several years in a row, that overheats the engine,” he said, adding that emerging markets are growing “a little bit slower than before.”
Beacon Journal business writer Betty Lin-Fisher contributed to this report.