moving towards globalism nestle
Deal doubts The more serious charge, levelled by those same analysts, is that Nestlé is only stepping up its pace of acquisitions because its organic growth is running out of steam. Certainly, the group is likely to miss its 4% target for sales-volume growth this year. In the first six months, growth slipped to 3.5%, from 4.6% in the same period last year. Nor does Nestlé compensate for its more sedate growth with sparkling profitability. Although its operating margin is at last rising again, increasing to a decent 11.7% this year, that is not much different from the 11.1% at smaller Danone, and it is well shy of Unilever's reported 15%—though Unilever, unlike Nestlé, strips out restructuring costs. But this assessment of Nestlé's financial performance ignores two things. The first is that Mr Brabeck has been reducing the group's reliance on highly profitable but mature businesses, such as coffee—the profit margin for Nescafé is around 40%—by moving quickly into faster-growing areas that require initial heavy investment, such as pet food, water and ice cream.