Nestlé reorganises waters business, plans to return US$20.1bn to investors

SWITZERLAND – The world’s leading food and beverage firm, Nestlé has announced changes in its waters business and unveiled plans of returning as much as US$20.1 billion to shareholders by 2022 through a new stock buyback program.

Nestlé said that that it will start a new share buyback program in January and may complement it with special dividends over the next three years.

The Swiss-based food company, which recently closed the sale of a dermatology for US$10 billion, has also signaled for more acquisitions to help the firm sustain faster growth and better profit margins.

To further accelerate profitable growth and create synergies, Nestlé has also announced changes in its water business and plans to integrate the Nestlé Waters business into the group’s three geographical zones starting January 2020.

The company is creating a dedicated Strategic Business Unit (SBU) which will report to Patrice Bula, member of the Executive Board and Head of Strategic Business Units, Marketing & Sales.

Nestlé said that the new Waters SBU will ensure strategic alignment globally and manage core global functions as well as help the firm to utilize its strong local expertise and better respond to rapidly changing consumer preferences.

The bottled water division was created in 1992 following Nestlé’s acquisition of Source Perrier. The business now has almost 50 renowned and iconic brands, such as S.Pellegrino, Perrier, Acqua Panna, Poland Spring and Nestlé Pure Life.

Changes in its Executive Board

Nestlé has also reorganized its board ahead of the exit of Maurizio Patarnello, Deputy Executive Vice President and Head of Nestlé Waters, who will leave the Nestlé Executive Board on December 31, 2019.

The Nestlé Board of Directors has appointed Sanjay Bahadur, currently Head of Acquisitions and Business Development, to the Executive Board as Deputy Executive Vice President, effective January 1, 2020.

Sanjay will head the newly created Group Strategy and Business Development function, which will support Nestlé in identifying internal and external strategic growth opportunities.

The new function will also manage external partnerships and licensing agreements for the Nestlé Group and oversee the company’s corporate venture capital activities.

Maurizio will continue to advise Nestlé Waters in order to ensure a smooth transition to the new organizational structure. During his tenure, he has overseen the launch of innovative products that meet new consumer trends.

Nestlé reports nine-month sales for 2019

Nestlé has also released its nine-month results. During the period, total reported sales increased by 2.9% to CHF 68.4 billion (US$68.84 billion).

Year-on-year growth acceleration was supported by the United States and Brazil. Organic growth was 2.7% in developed markets, supported by strong RIG. Growth in emerging markets was 5.0% while net acquisitions increased sales by 0.7%.

Commenting on the results, Mark Schneider, Nestlé CEO said, “We are pleased with our nine-month results and have made further progress towards our 2020 financial goals.

“We continue to see good momentum in our largest market, the United States and very strong growth for Purina PetCare globally.

“Nestlé’s growth was supported by investment behind our brands, rapid innovation and disciplined execution. During the third quarter, the roll-out of Starbucks products continued, now reaching 34 countries.

“Our portfolio transformation is fully on track, as shown by the timely completion of the Nestlé Skin Health disposal.

With prudent investments and a disciplined approach to acquisitions our value creation model is generating profitable growth and attractive cash returns for our shareholders.”

The company expects full year organic sales growth of around 3.5% and the full-year underlying trading operating profit margin at or above 17.5%.

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