Paul Bulcke to succeed Brabeck as Nestle CEO
Nestle SA appointed Paul Bulcke to succeed Peter Brabeck as chief executive officer of the world’s largest food company, surprising analysts who expected finance head Paul Polman to get the job.
By Agencies |
GENEVA: Nestle SA appointed Paul Bulcke to succeed Peter Brabeck as chief executive officer of the world’s largest food company, surprising analysts who expected finance head Paul Polman to get the job.
Bulcke, a 53-year-old Belgian who heads Nestle’s business in the Americas, will take over on October 18, the Vevey, Switzerland-based company said on Thursday in an e-mailed statement. Five of seven analysts surveyed by Bloomberg said Polman would be selected. Brabeck, a 62-year-old Austrian, has been CEO for 10 years and will remain chairman.
Nestle adhered to its practice of naming veteran managers to the top post, passing over Polman, who joined in 2006. Bulcke started working at the food producer 28 years ago. Brabeck, who has tripled Nestle’s share price since becoming CEO, will probably continue to influence strategy, according to analysts.
“The culture of Nestle will remain the same,” Jerome Schupp, who helps manage 30 billion Swiss francs ($25.6 billion) as an analyst at Banque Syz & Co. in Geneva, said before the appointment was made. He holds Nestle shares.
Nestle shares slid 7 francs, or 1.3%, to 522 francs at 4:04 p.m. in Zurich after the announcement was made. They rose the most in five years on August 15, adding 9.5% as Brabeck unveiled an unexpected 25 billion-franc share repurchase and said the food producer no longer plans major acquisitions.
The Austrian spent more than $30 billion on acquisitions to create a company with more than twice the revenue of Kraft Foods Inc, Nestle’s main competitor. To keep meeting growth goals, his successor must add at least $4 billion in sales a year without making purchases, a strategy Nestle now has shunned.
Nestle said last month its annual budget for purchases will drop to about 2 billion francs. The food producer spent almost five times that much on this year’s acquisitions from drugmaker Novartis AG of the Gerber baby-food brand and the company’s medical-nutrition business.
Nestle has acquired more than 60 companies under Brabeck, adding goods including Ralston Purina pet foods and Dreyer’s ice cream. The purchases helped to boost net income to 9.2 billion francs last year, almost triple 1996’s earnings. Revenue neared 100 billion francs last year, compared to 60.5 billion francs in 1996, the last full year before Brabeck took over.
Bulcke’s first tasks will include helping Nestle’s nutrition unit meet its 10 billion-franc revenue goal next year and keep sales rising 10% annually. The division had sales of 5.2 billion francs in 2005, before the acquisitions from Novartis and the purchase of diet-foods maker Jenny Craig.
Sales growth may slow from the first half, the company said in August.
Bulcke, a 53-year-old Belgian who heads Nestle’s business in the Americas, will take over on October 18, the Vevey, Switzerland-based company said on Thursday in an e-mailed statement. Five of seven analysts surveyed by Bloomberg said Polman would be selected. Brabeck, a 62-year-old Austrian, has been CEO for 10 years and will remain chairman.
Nestle adhered to its practice of naming veteran managers to the top post, passing over Polman, who joined in 2006. Bulcke started working at the food producer 28 years ago. Brabeck, who has tripled Nestle’s share price since becoming CEO, will probably continue to influence strategy, according to analysts.
“The culture of Nestle will remain the same,” Jerome Schupp, who helps manage 30 billion Swiss francs ($25.6 billion) as an analyst at Banque Syz & Co. in Geneva, said before the appointment was made. He holds Nestle shares.
Nestle shares slid 7 francs, or 1.3%, to 522 francs at 4:04 p.m. in Zurich after the announcement was made. They rose the most in five years on August 15, adding 9.5% as Brabeck unveiled an unexpected 25 billion-franc share repurchase and said the food producer no longer plans major acquisitions.
The Austrian spent more than $30 billion on acquisitions to create a company with more than twice the revenue of Kraft Foods Inc, Nestle’s main competitor. To keep meeting growth goals, his successor must add at least $4 billion in sales a year without making purchases, a strategy Nestle now has shunned.
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“To be fair to Brabeck, he has done most of the changes,” Jon Cox, an analyst at Landsbanki Kepler in Zurich with a ‘buy’ recommendation on the stock, said before the appointment. “Given the size of the company, it literally takes a decade to pilot through a large reorganisation. I do not expect to see any major changes.”Nestle said last month its annual budget for purchases will drop to about 2 billion francs. The food producer spent almost five times that much on this year’s acquisitions from drugmaker Novartis AG of the Gerber baby-food brand and the company’s medical-nutrition business.
Nestle has acquired more than 60 companies under Brabeck, adding goods including Ralston Purina pet foods and Dreyer’s ice cream. The purchases helped to boost net income to 9.2 billion francs last year, almost triple 1996’s earnings. Revenue neared 100 billion francs last year, compared to 60.5 billion francs in 1996, the last full year before Brabeck took over.
Bulcke’s first tasks will include helping Nestle’s nutrition unit meet its 10 billion-franc revenue goal next year and keep sales rising 10% annually. The division had sales of 5.2 billion francs in 2005, before the acquisitions from Novartis and the purchase of diet-foods maker Jenny Craig.
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The new CEO also must achieve a goal of widening the company’s operating margin, a gauge of profitability, each year even as commodity prices mount. Nestle has estimated its bill for milk will increase by about 1.5 billion francs this year to 6 billion francs. Sales growth may slow from the first half, the company said in August.
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