Nestlé Considers IPO for Alcon Nine-Month Sales Suggest Growth Target Will Be Achieved in 2001

   
To Press Releases listVevey,Oct 19, 2001

  • Nestlé considering IPO for minority stake in Alcon
  • Real internal growth 4.2 percent - ahead of 4 percent trend target
  • 9.7 percent sales growth at comparable structure and constant exchange rates
  • Schöller acquisition completed, subject to regulatory approval
  • Nestlé to launch a CHF 200 million corporate venture capital fund
  • Peter Brabeck-Letmathe, CEO of Nestlé: "I am pleased to report that Nestlé is on track to reach its RIG objective and close the year with higher sales and profits."

The Nestlé Group's consolidated sales reached CHF 62.4 billion during the first nine months of 2001, an increase of 4.9 percent over the corresponding period of the previous year. At comparable structure and constant exchange rates, sales rose by 9.7 percent. These figures will be commented in detail at the Nestlé Group press conference today.

Sales by Management Responsibilities and Geographic Area
  January-September 2001
in CHF billion
January--September 2000
in CHF billion
Variation *(%) January--September 2001
Real Internal Growth (%)
Total 62.4 59.5  +4.9 +4.2
Food        
  - Europe 19.7 19.4  +1.5 +1.9
  - Americas 18.9 18.0  +5.0 +2.9
  - Asia, Oceania and Africa 11.5 11.6  -0.2 +6.1
Other activities 12.3 10.5 +16.8 +8.3
* Calculation based on unrounded sales figures

Real internal growth for the nine months was 4.2 percent, unchanged from the corresponding period of the previous year. The bottled water activities and Alcon continued their strong growth performance with near double digit increases in real internal growth. Emerging markets in general continued to deliver growth above the Group's 4 percent objective and there was a good performance from many industrialized markets. As a result, Europe's growth in the first nine months was 1.9 percent, Zone Americas reached 2.9 percent and Zone Asia, Oceania and Africa achieved 6.1 percent. The pharmaceutical and water business delivered high growth rates, contributing to an increase of 8.3 percent in Other activities.

Sales by Product Group
  January-September 2001
in CHF millions
January--September 2000
in CHF millions
Variation *(%) January--September 2001
Real Internal Growth (%)
Beverages 18.0 16.9 +6.4 +6.1
Milk/Nutrition 17.3 16.4 +5.7 +3.6
Culinary 15.4 15.1 +2.4 +1.9
Chocolate/Confectionery  7.8  7.6 +2.4 +3.0
Pharma  3.9  3.5 +9.9 +9.1
* Calculation based on unrounded sales figures

All product groups contributed positive real internal growth with pharmaceuticals and beverages clearly above Group average. Selling prices had a 5.5 percent favorable influence on sales which included the positive impact of the trade spend review, as well as price adaptations.
As expected, both exchange rates and divestitures net of acquisitions had a negative impact on consolidated sales, of 3.7 percent and 1.1 percent respectively.

Nestlé To Explore Initial Public Offering of Alcon

Nestlé further announces that it is exploring a possible initial public offering (IPO) of a minority stake in Alcon, its wholly-owned eye care business.

Nestlé believes an IPO would highlight the intrinsic value of Alcon for Nestlé shareholders and increase the financial flexibility of Nestlé and Alcon. Additionally, it would strengthen the AAA credit rating of Nestlé and allow for the further development of its core food, nutrition and beverage businesses. Improving the transparency of Alcon's growth and profitability will furthermore highlight the value of Nestlé's continuing majority stake in Alcon.

Nestlé Chief Executive Officer, Peter Brabeck-Letmathe, said: "Alcon has grown to become the world-wide leader in eye care. Given the size and growth profile of the business, we believe that value can be enhanced for Nestlé's shareholders and for Alcon by separating the two operations. An IPO would highlight Alcon's success and continuing influence in the eye care industry and would create a direct vehicle for investment in this premier speciality health care business, while giving both companies greater financial flexibility and strengthening Nestlé's AAA credit rating. An IPO would also allow us to benefit from Alcon's future performance through Nestlé's retained majority stake. Against this background and the exciting opportunities available to Alcon, we believe that the time is right to explore an IPO."

Nestlé has nurtured the growth of Alcon since it acquired the company in 1977, supporting the company's research and development efforts aimed at treating glaucoma, cataract, macular degeneration and other eye diseases. Under the leadership of Tim Sear, its Chief Executive Officer, and his predecessor Ed Schollmaier, Alcon's experienced, long-tenured management team has generated compound annual growth in revenues of more than 10% over the past ten years. Mr. Sear would continue as Alcon's Chief Executive Officer following any IPO.

Alcon is the global leader in the research, development, manufacture and marketing of ophthalmic products, including surgical instruments and accessory products, intraocular lenses, refractive surgical lasers, prescription drugs and contact lens care solutions. Founded in Fort Worth, Texas in 1947, Alcon now employs more than 11,000 people around the world. Alcon's total sales for 2000 were $2.6 billion with activities in more than 170 countries.

Further announcements regarding the possible IPO of Alcon will be made in due course. If an offering were to take place, it would not be until next year at the earliest.

(This press release is not an offer to sell, nor a solicitation of offers to buy, securities of Alcon. If a public offering is made in the U.S., such offers will be made by a prospectus filed with the Securities and Exchange Commission.)

Schöller Acquisition On Track 

Nestlé also communicates that the negotiations initiated with the shareholders of the Schöller Group in June 2001 have now been successfully completed.
Nestlé will acquire 100% of the Schöller Group comprising their ice cream, frozen food and frozen bakery businesses, subject to the necessary regulatory approvals, expected to come at the earliest in 2002.
In 2000, the Schöller Group's sales amounted to about CHF 2 billion with sales through the retail sector, foodservice as well as direct delivery. The Schöller Group has its main activities in Germany, and is represented in some 17 other countries in Western and Central Europe.
Through this acquisition, Nestlé has the opportunity to expand its business in the significant ice cream markets of Germany, as well as Northern and Central Europe. The Group thus consolidates its position as the strong number two player in the global ice cream sector which counts among the strategic growth areas of the Group.

Launch of the Nestlé Corporate Venture Capital Fund

Nestlé finally states that it is launching a corporate venture capital fund of up to CHF 200 million, to be managed by an independent management team, in order to better access new science and technology opportunities. The fund will look especially at the area of food and life sciences, as well as at packaging and other commercial applications, allowing Nestlé to gain access to potentially significant know-how, technologies or applications through acquisitions, minority stakes, licensing and joint-ventures. Finally, the Fund will also provide a possibility to bring Nestlé Research & Development projects to the market as start-ups, especially those that are of a high-risk nature or that do not fit the Group's strategic priorities.
Nestlé is confident that this capital venture fund will broaden its R&D potential, accelerate the change process already launched in the research system and facilitate access to and cooperation with the highly motivated and creative founders of start-up companies. Moreover, Nestlé expects the Fund to produce a return in line with corporate venture funds over a 10-year horizon.

Outlook

Despite a less favorable economic climate in parts of the world, the Group believes it will reach both its stated growth objective as well as higher sales and profits for the year 2001 as a whole. The nature of its business and its unmatched breadth of activities, geographically as well as product-wise, suggest that Nestlé is less subject to cyclical phenomena than many other business areas. As a result and in combination with the Group's long-standing experience in handling difficult market conditions, Nestlé remains confident about the long term prospects for the company.
 
This press release contains certain "forward-looking" statements. These statements are based on management's current expectations and are naturally subject to uncertainty and changes in circumstances. Actual results may vary materially from the expectations contained herein. The forward-looking statements contained herein include statements about a possible public offering of shares of Alcon and the expected benefits of that offering for Nestlé, Alcon and their respective shareholders. Factors that could cause actual results to differ materially from those described herein include: conditions in the securities markets; the failure of a possible initial public offering to have the expected benefits for Nestlé, Alcon and their respective shareholders; the inability to complete the offering under consideration due to market conditions; changing consumer or marketplace trends; and the general economic environment and the economic environment of the industries in which Nestlé and Alcon operate. Except to the extent required under applicable law, neither Nestlé nor Alcon is under any obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.