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October 30, 2019

Nestle reportedly eyeing sale of Hsu Fu Chi, Yinlu units in China

Nestlé is reportedly weighing up options for two of its Chinese businesses after a recent poor performance. 

By Dean Best

Nestlé is reportedly weighing up options for two of its Chinese businesses after a recent poor performance added to their longer-term woes, with a sale of the units possibly on the table. 

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Bloomberg, citing people familiar with the matter, said the Zurich-listed food giant is seeking to raise more than US$1bn from the potential disposal of its “controlling stakes” in China-based confectionery unit Hsu Fu Chi, and food and beverages firm Yinlu. Nestlé acquired both businesses in 2011. 

Speaking in July after reporting first-half results, Nestlé finance chief François-Xavier Roger said overall organic sales growth in China eased to a “low single-digit” pace, including a slowdown in its infant-formula business. Chief executive Mark Schneider said then that Hsu Fu Chi in particular, suffered from a “disappointing” Chinese New Year performance. 

When Nestlé reported its nine-month results in October, the company said China reported flat growth due to “softness in some categories”. While culinary, coffee and ice cream performed well, infant nutrition “slowed to low single-digit growth” following a sales decline for the S-26 range. And Yinlu peanut milk and congee saw a decrease in sales, the company said. 

One of Bloomberg‘s sources, who both declined to be named because the information is private, said Nestlé could opt to sell only part of its stakes in one or both of the Chinese units. No final decisions have been made, and there’s no certainty the talks will lead to a deal, the people said. 

A Nestlé spokesperson said the company does not comment on market speculation when contacted by just-food today (30 October).

See just-food’s insights here: Innovation, pricing, plant-based, China – the top takeaways from Nestle’s H1 results

Related Companies

Free Whitepaper
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What is the impact of China’s Zero-COVID lockdowns on economic activity, consumer goods and the foodservice industry?

While wanting to protect the country from being overwhelmed by Omicron, China’s adherence to a Zero-COVID policy is resulting in a significant economic downturn. COVID outbreaks in Shanghai, Beijing and many other Chinese cities will impact 2022’s economic growth as consumers and businesses experience rolling lockdowns, leading to a slowdown in domestic and international supply chains. China’s Zero-COVID policy is having a demonstrable impact on consumer-facing industries. Access GlobalData’s new whitepaper, China in 2022: the impact of China’s Zero-COVID lockdowns on economic activity, consumer goods and the foodservice industry, to examine the current situation in Shanghai and other cities in China, to better understand the worst-affected industry sectors, foodservice in particular, and to explore potential growth opportunities as China recovers. The white paper covers:
  • Which multinational companies have been affected?
  • What is the effect of lockdowns on foodservice?
  • What is the effect of lockdowns on Chinese ports?
  • Spotlight on Shanghai: what is the situation there?
  • How have Chinese consumers reacted?
  • How might the Chinese government react?
  • What are the potential growth opportunities?
by GlobalData
Enter your details here to receive your free Whitepaper.

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