Nestlé has $20 billion to spend on deals or buying back shares

Lon­don (CNN )Nestlé share­hold­ers could be in for anoth­er $20 bil­lion wind­fall if the mak­er of Nespres­so and KitKat to find busi­ness­es worth buy­ing.

Nestlé (NSRGY), one of the world’s largest com­pa­nies, closed a $10.3 bil­lion sale of its skin­care busi­ness at the begin­ning of Octo­ber and is now fig­ur­ing out what to do with its grow­ing war chest.

The com­pa­ny said in an earn­ings state­ment on Thurs­day that it could return as much as 20 bil­lion Swiss francs ($20 bil­lion) to share­hold­ers between 2020 and 2022, pri­mar­i­ly via share buy­backs.

Nestlé is also step­ping up its hunt for deals over the next few years and has cre­at­ed a new unit led by San­jay Bahadur, cur­rent head of acqui­si­tions and busi­ness devel­op­ment, which it said would iden­ti­fy “val­ue-cre­at­ing invest­ments” in the food, bev­er­age and nutri­tion­al sec­tors.

    “Should any siz­able acqui­si­tions take place dur­ing this peri­od, the amount of cash to be dis­trib­uted to share­hold­ers be adjust­ed accord­ing­ly,” it said.

    Plans for anoth­er big cash hand­out fol­low share buy­backs total­ing 20 bil­lion Swiss francs ($20 bil­lion) between 2017 and 2019.

    The Swiss com­pa­ny’s share price is up 32% this year, indi­cat­ing just how strong­ly investors sup­port CEO Mark Schnei­der’s shake up of the 153 year-old firm.

    Nestlé report­ed sales growth of 3.7% for the first nine months of this year, in line with esti­mates.

    Growth was sup­port­ed by strong momen­tum in the Unit­ed States, its largest mar­ket, and “very strong growth” for Puri­na Pet­Care glob­al­ly, Schnei­der said.

    “Pet care had an out­stand­ing quar­ter, while nutri­tion and health sci­ences, and pre­pared dish­es also beat expec­ta­tions,” Andrew , senior research ana­lyst at Bern­stein, said in a note.

    But the of the com­pa­ny’s pow­dered and liq­uid bev­er­ages busi­ness was dis­ap­point­ing, he added, “giv­en ongo­ing progress with the Star­bucks acqui­si­tion.”

      Nestlé agreed a year to sell Star­bucks’ (SBUX) pack­aged cof­fees and teas around the world. It now sells Star­bucks prod­ucts in 34 coun­tries and the acqui­si­tion of the license has sales in the Amer­i­c­as, Nestlé said.

      Nestlé con­firmed its earn­ings guid­ance for 2019. The com­pa­ny expects sales growth of 3.5% and an increase in earn­ings per share.

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