Nestle cuts the meat in bid to build healthier food company

ZURICH: Nestle SA put its ailing Herta lunch-meat business up for sale as chief executive officer Mark Schneider tries to spark faster sales growth by transforming the world’s largest food company through acquisitions and divestments.

The Swiss company’s shares r ose as much as 3. 7 % t o a record as it forecast improved sales and said that it expects to cede control of its dermatology unit by the middle of this year. After 14 billion francs ($14 billion) of deals in 2018, there’s no sign Schneider will stop nipping and tucking in an attempt to build a stronger Nestle.

The food company is “ticki n g a l l t h e b o x e s ” wi t h “improvement on all fronts,” wrote Jean-philippe Bertschy, an analyst at Bank Vontobel.

Revenue accelerated for the first time in seven years in 2018.

The food company has been gobbling up smaller, fastergrowing brands such as Blue Bottle Coffee and Sweet Earth as health-conscious consumers switch to niche brands and forgo mainstream labels.

Nestle, under pressure from activist shareholder Dan Loeb to boost returns, also forecast 700 million francs of restructuring costs this year amid the shake-up.

The company plans to push further into plant-based alternatives for meat as it considers selling Herta, a business with sales of 680 million francs. “With these portfolio changes, the strategic picture of the group becomes much clearer than one to two years ago, with our focus on food and beverage and nutritional health,” Schneider told reporters at Nestle’s headquarters i n Vevey.

One obstacle is deflation in Europe, Japan and Australia, which contributed to the weakest annual gain in pricing in more than a decade.