Nestle is no stranger to M&A, says CEO

Nestlé is no stranger to M&A, says CEO

If the opportunity for mergers or acquisitions arises and it makes "strategic sense" for Nestle, the food and beverage giant will be ready, the new chief executive told CNBC following its earnings release.

"When it comes to M&A, I think Nestle is no stranger to that," Nestle CEO Ulf Mark Schneider, told CNBC.

"In fact some of the most strident deals of the 1980s that actually put the company on the map where it is today, as the world's largest food and beverage company, those were coming from here."

Schneider took on Nestle's top role at the start of 2017, having come from his previous role as Fresenius Group's CEO, a health care firm that's seen many deals during his 13-year tenure.

When it comes to the health aspect and Schneider's previous work, the CEO said Nestle had already made a lot of progress in upgrading its nutritional profile in food and beverage over recent years.

In addition, while deal-making at Nestle has been relatively quiet in recent years, Schneider said the group would look at potential deals "when the time is right."

"I'm no stranger to deal-making, but I think it's basically a continuation of what we've done before and that is when there are deal opportunities that make strategic sense, we'll be there."

Nestle Toll House Cookies
Justin Sullivan | Getty Images

The chief executive's comments come as the food group reported its full-year earnings for 2016. On Thursday, the food giant reported 2016 sales of 89.5 billion Swiss francs ($89.4 billion).

Meanwhile, net profit came in at 8.5 billion Swiss francs, below a Reuters poll estimate, with the group saying that one factor which particularly impacted the figure was a one-off non-cash adjustment to deferred taxes.

"There's no beating around the bush, we are below our own expectations. I think what happened here in the second half of 2016 – there were two things coming at the same time," said Schneider.

"One is volume growth (which was) disappointing across the board and that's reflected in some other consumer goods companies as well. We also hoped in the second half to see stronger pricing – pricing has come in somewhat but not as fast, not as strong as we felt it was going to be."

Nestlé: Committed to return to mid-single digit growth by 2020

Looking ahead, the food group's chief said beginning of 2017 was likely to be tougher than the end of the year, especially with the current level of volatility seen across the globe.

On Thursday, Nestle under-performed most of the STOXX 600 index, posting declines of 2 percent around 12.20 p.m. U.K. time. Nestle's 2016 organic growth was at "the lower end" of the group's expectations, with it coming in at 3.2 percent for 2016, and the company forecasting 2017 growth between 2 to 4 percent.

"In this age of volatility and also still somewhat deflationary environments in major markets, we believe that guidance keeps us hedged on both sides, and we certainly have a strong meet-or-exceed culture when it comes to our guidance."

"So at this point it was prudent to give ourselves a bit of wiggle room in that regard. Long-term clearly there is a commitment to drive organic growth, we also have a commitment to be back in mid-single digits by 2020 – I think there's lots of internal initiatives underway to get there."

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