Inflation and demand concern Nestlé

Nestlé, the world leader in the nutrition sector, signalled "concern" with the impact of inflation on the demand in Brazil, the third largest market in the world for its products by announcing yesterday his result in the first nine months of the year. "You're worried about your country? I am too, "said the world CEO Paul Bulcke, upon being asked by the value PRO, real-time information service of Value, in the company's headquarters in Vevey, in Switzerland.
The value found that Nestlé registered in Brazil organic growth (excluding acquisitions, divestments and exchange rate) of about 10%-up from 8.8% of emerging in General, double the expansion in the Americas (5.1%) and more than twice the global average (4.4%), in the first nine months of the year. In the world, the global revenue 68.4 billion Swiss francs ($ MB billion) between January and September, a rise of 4% over the same period in 2012.
The high revenue in Brazil came especially for the price increase, said the Vice President for the Americas, Chris Johnson. "For inflation increased prices, particularly of dairy products," said the Executive.
As Bulcke, with "the back of inflation" in Brazil the company seeks to compensate for trying to pass as much what can the prices, which in turn tends to influence demand. "We haven't seen fall [demand] in Brazil, but we are worried a little bit," he said in Portuguese learned in their working times in Portugal.
For Bulcke, the fact they are growing less emerging has the good side now return to a "sustainable expansion" and that can be carried on in time. In the specific case of Brazil, it is considered that the country "has some issues to resolve," in reference to structural reforms. "But trust us Brazilians."
The devaluation of currencies like the real Brazil and India's rupee against the Swiss franc have reduced the value of global sales at 2.5%. The fragility of these two coins weighed on sales expansion, said the Chief Financial Officer Wan Ling Hammer.
Nestle estimates that the real devaluation of 9.7% against the Swiss franc from January to September. But Bulcke downplayed the impact to the business. "We produce almost all locally in Brazil, and care very little. Is an advantage for us, "he said.
Between cautious and optimistic, Johnson considered the business environment in Brazil "clearly a challenge, but we are in the country for 90 years and let's get more 90 years certainly". Asked about the current image of the country abroad, after being one of the most appreciated on the markets, Johnson considered that the enthusiasm may have been somewhat exaggerated. But noted that Brazil continues to grow, "is growth booster in the Americas zone, and we are optimistic for the future."
The announcement of the results, Bulcke showed a chart that shows slight decline in investments (Capex) of just over 7% of the total revenue in 2011 for less than 5% lately, in what he called a return to normality. In 2011, for example, the idea was to put the foot on the accelerator to be better prepared for the resumption of the global economy.
Asked about the influence of this movement on investments in Brazil, Bulcke said that "each country has its curve", without going into details. Johnson said the company will continue to invest in the country. "In the Americas, our Capex is stable, but varies in each country, depends on the product etc."
"In Brazil, our growth is very good, anyway. We have a wide variety of products, both the premium and popular category, we're big in the country and all this helps, "said Johnson.
Bulcke reaffirmed yesterday the determination of Nestlé to make divestitures in less profitable areas or who do not adapt their global strategy. Earlier this month, the Executive had already told investors that the company has completed the revision of its 1.8 thousand business units, to identify what should be discontinued due to poor performance. He did not reveal the outcome of this study. Analysts estimate that the Jenny Craig diet centers and PowerBar snacks unit may be sold.
Asked if there will be disinvestment in Brazil, Johnson replied that the decision will not be based in countries, but in business units.
4% growth in worldwide sales until September was due largely to improvement in demand in emerging economies. "Asia and Africa accelerated the resumption," said Bulcke.
Overall, the Swiss group's business increased by 1.1% in developed countries and 8.8% in emerging markets. Was lower in both cases about 2012, when the expansion had been of 2.4% and 11.7%, respectively.
In Latin America, the company points out that the economic slowdown observed in the region continued, mainly under the effect of inflationary pressures, but that their business "resisted", with most of the product categories registering double-digit growth, aided by "price adjustment".
The strategy to grow in emerging markets continues. But this time the direction of Nestlé returned to mention developed markets, until then forgotten on austerity measures in Europe that sank the demand for a long period.
In Europe, Nestlé has reduced the prices of products such as coffee and chocolate and sales climbed 0.9%-situation contrasts with that of Brazil, for example, where prices have risen.