Nestle thinks US regulator is licked over ice cream deal.
'I count on the fact that we will be able to get the final green light to make this acquisition,' chief executive Peter Brabeck told investors, adding that talks continued with US regulators who had moved to block the deal.
Nestle expects approval by midyear for the acquisition, which would make it joint leader in the big US ice cream market with Anglo-Dutch group Unilever.
Nestle has offered concessions to ease fears it would be overdominant in the US premium ice cream segment. Nestle and Dreyer's originally unveiled the deal in mid-June 2002. Mr Brabeck said Nestle's priority this year was to improve profitability and insisted that the firm, whose brands include Nescafe coffee and Perrier mineral water, would not sacrifice margins for the sake of sales growth. 'I want to see a further improvement in profit margins, this is our most important thing,' he told investors.
However, Mr Brabeck also hinted the weak global economy was having an impact on Nestle.
'There is no doubt the food industry is less vulnerable to the overall economic situation but on the other hand it is wrong to say nothing will impact it,' he added Nestle said in April it planned to focus on organic growth - a sales benchmark which strips out the effects of exchange rates and acquisitions - after it failed to meet its previous four per cent core growth target for the fifth quarter in a row.
It has a long-term annual organic growth target of five to six per cent.
First-quarter organic growth was 4.6 per cent and the company expects the rate to improve during the year.
Chief financial officer Wolfgang Reichenberger ruled out the idea of increasing stock buybacks for the time being.
'We hold about four per cent of Nestle stock in treasury. We have a programme. This is not the moment to step it up,' he said, noting the level of the firm's debt and its reluctance to jeopardise its top credit rating.
The officials were speaking to investors after a two-day conference at which Nestle outlined its plans to transform itself from a first-stage processor of agricultural products into a higher-value-added food, health and nutrition company.
Mr Brabeck ruled out turning the firm into a pharmaceutical or cosmetics company but said he would look to joint ventures.
Nestle has a 49 per cent stake in Gesperal, whose other shareholder is France's Bettencourts. Gesperal has a majority stake in L'Oreal, the world's top cosmetics group.
Under the terms of a 1974 contract between Nestle and the family, the Bettencourts have the right to sell all or part of their stake in Gesperal to Nestle until March 26, 2004.
'From our side there is no reason to renegotiate the put option,' Mr Brabeck said.
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|Publication:||The Birmingham Post (England)|
|Date:||May 28, 2003|
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