Nestlé provides solidity as well as diversification

Although the recent rollercoaster ride of global markets may have robbed many of their appetite, food and water are essential for our existence.

Switzerland’s Nestlé is the world's number one food company in terms of sales and also occupies the top slot globally for bottled water, including well-known brands Perrier and Vittel. As if underscoring these building blocks of life, Nestlé’s net profits grew 18.4% to SFr4.9 billion in the first half of 2007.

“During a period of intense market turmoil, stocks offering a promise of solidity and diversification possibilities have enhanced appeal”, according to Neil Rogan Manager of the Gartmore Global Focus Fund and Gartmore SICAV Global Focus Fund. “Large-cap Nestlé, a fund holding, has a strong balance sheet and important stakes in highly attractive businesses - Alcon (contact-lens solutions) and cosmetics giant L'Oréal. Moreover, these strategic holdings are not reflected in Nestlé’s overall share price, representing one among various elements that could provide upside”.

The company has also announced a SFr25 billion share buyback programme to be completed over three years, in large part based on the future prospects of the foods and beverage business. Nestlé is already reaping the rewards of the franchise it has developed in nutrition, health and wellness. Also, at a time of rising food prices, Nestlé has been able to handle its own costs well.

“While anxiety may dull the appetite, it can also encourage comfort eating – chocolate products, such as KitKat, feature among Nestlé’s varied brands”.