GO
Loading...

Nestle CEO: Debt deal is key to our success in US

Thursday, 17 Oct 2013 | 10:43 AM ET
Nestle will hit earnings target: CEO
Paul Bulcke, CEO of Nestle, explains that the group expects to achieve its guidance due to a combination of "real internal growth" and "softening" prices.

The short-term fix to the U.S. debt ceiling is a "starting condition" for Nestle's continued growth in America, the company's chief executive told CNBC on Thursday, but warned that further uncertainty would only discourage demand.

"I think it is a good thing that the start of a solution, the possibility of a solution is there… It really creates some stability in the environment and we need some stability, because consumer confidence is so importantly linked with that," said Nestle CEO Paul Bulcke, in an exclusive interview.

"To have some stability around is a good start, or starting condition, for continuing our growth in the United States," he added.

The Belgian chief executive's comments came one day after in Washington struck a short-term deal to reopen government and raise the U.S. debt ceiling. The agreement means government agencies will be funded until January 15, and the government can continue to borrow until February 7.

(Read more: $24 billion: The real cost of the shutdown)

Bloomberg | Getty Images

Nestle — which manufactures KitKat chocolate bars and Maggi soups, and is the world's largest food group by revenue — employs around 45,000 people in the U.S.

Bulcke said that U.S. consumer confidence suffered "little ups-and-downs", which had been aggravated by the government shutdown and budget impasse.

"Sometimes we see a little pick-up, and we are all enthusiastic, but then you have what we just saw. It doesn't help. People say 'Wait, we never know what is going to happen,' and uncertainty creates an environment of no consuming, holding back and that is not very propitious for our business," he said.

Nestle reported results for the first nine months of the year on Thursday that narrowly missed expectations. Underlying sales growth came in at 4.4 percent on revenue of 68.4 billion Swiss francs ($75.7 billion), lagging the 69.3 billion Swiss francs estimated by a Reuters poll of analysts.

(Track Nestle stock live)

The disappointing numbers follows several quarters of weak performance, as the company grapples with sluggish demand in the U.S. and austerity-hit Europe, and slowing growth in emerging markets.

Nonetheless, Nestle held its growth outlook of 5 percent organic growth for the full-year, and Bulcke said he was confident the global economic outlook was improving.

"Are we missing expectations, or are expectations missing reality? That nervousness I don't have," he told CNBC.

—By CNBC's Katy Barnato. Follow CNBC on Twitter: @CNBCWorld

  Price   Change %Change
.SX3P
---
NESN
---
USD/CHF
---
SMI
---

Featured

Contact Earnings Central

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    › Learn More