Farming & Food

Nestle plans to return €18.2bn to shareholders by 2020

Sales growth boosted by Starbucks’ Nespresso deal

Nestle has named Guillaume Le Cunff as the new head of Nespresso. Photograph: Adrian Moser/Bloomberg

Thu Oct 17 2019 - 08:14

Nestle announced plans to return 20 billion Swiss francs (€18.2 billion) to shareholders by 2020 and said nine-month sales growth accelerated, helped by products such as Starbucks-branded coffee for its Nespresso machines.

Revenue rose 3.7 per cent on an organic basis in the nine months through September, matching the analyst consensus.

The company also said it's restructuring its bottled water unit, which will no longer run as a separate business, and it named a new head for Nespresso, Guillaume Le Cunff. In addition, Nestle created a new management group to seek out growth opportunities and acquisitions, to be led by Sanjay Badahur.

Nestle is flush with cash after selling its skin health unit earlier this month for $10 billion. The company said it plans to start a buyback in January and may complement it with special dividend payments through 2022. The size of each depends on market conditions.

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Knockoff pods

Strong demand for coffee and pet food in the US boosted sales. The Starbucks-branded capsules that went on sale in February have been giving Nestle’s coffee business a lift, providing the company with a weapon to fight knockoff pods with its own versions in supermarkets for the first time.

Water is still a weak point, with volume declining as mass-market local brands struggle to grow and gain share amid tough competition. Exiting the category seems implausible, leaving Nestle with little other choice than to tough it out, according to Jefferies analyst Martin Deboo. – Bloomberg

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