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Nestle 'not worried' by Ahold
LONDON, England (Reuters) -- The chief executive of Nestle SA, the world's largest food group, said on Monday he was not worried by his company's exposure to Dutch Ahold, currently embroiled in an accountancy scandal. Ahold, the water-to-chocolate giant's third-largest customer after supermarket leaders Wal-Mart and Carrefour, is currently being investigated in the United States and the Netherlands over accounting irregularities at its U.S. Foodservice business. But Peter Brabeck told a press briefing he had assessed the situation at the weekend and contracts to supply the retail giant were negotiated on a local basis and he saw no reason to intervene at group level. "Of course we are reviewing the situation. This is just good bookkeeping and although I'm not paid to be comfortable, I haven't seen anything to worry about," he said. Nestle posted on Thursday 13 percent growth in 2002 profits despite the ongoing global recession, but disappointed investors as it missed its own four percent long-term target for real internal growth (RIG), partly due to problems in Mexico. However, Brabeck said the Mexican problems -- mainly associated with the amount of capital tied up in inventories -- were largely over, and if the retail environment improved that business would return a positive RIG rate in 2003. "I don't see any problems here," he said, adding the company would in 2003 once again be giving priority to margin growth over real internal growth. However, Brabeck said the market was unduly fixated on the RIG target, which he said would be easy to hit if his company chose to account sales differently. "I could easily find 500 million francs," he said. "It's a day and a half's turnover. I'm a salesman. I know all the tricks. If you're asking me if I am going to do everything to achieve the four percent target -- no." Nestle's margin at EBITA level (earnings before interest, tax and amortisation) improved by about 50 basis points to 12.3 percent in 2002, in part due to the acquisition of U.S. petfoods group Ralston Purina. Brabeck said he remained optimistic over the successful completion of a takeover of U.S. premium ice-cream company Dreyer's despite an ongoing investigation by the Federal Trade Commission. Nestle has complied with a request from the FTC to wait at least 20 days before signing the deal. The regulator is thought to be concerned about the combined company's dominance in the premium ice cream market. Shares in Nestle, which were trading at 272 francs before the Reuters report, fell to 267.50 francs by 1540 GMT, down two percent on the day. Copyright 2003 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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