It was only two paragraphs long. But the fallout from a surprise sales warning issued by Unilever last week was anything but minor.
Shares in consumer goods companies across Europe and the US all fell after Unilever warned that weak growth in emerging markets, exacerbated by currency weakness in countries from India to Indonesia and Brazil, would result in underlying sales growth of 3 to 3.5 per cent for the third-quarter. This compares with growth of 5 per cent reported during the first two quarters of the year.
Mexico’s trust-busters are sometimes regarded as a rather toothless bunch. The concentration of markets as disparate as beer, television and telephony appears to prove the thesis. But the problem often lies not with the trust-busters – officially known as the Federal Competition Commission – but with a legal system that makes prevarication into a fine art.
That the commission does have real teeth was shown on Tuesday by its decision to reject Nestlé´s takeover of Pfizer’s baby foods business in Mexico because it would give it too big a share of the nation’s market, hence giving it a free hand to raise prices.
Nestlé is one of the few multinationals that never really left Myanmar. It quietly allowed Thai traders to import its instant coffee and other products in the country and retained a small office to keep an eye on things.
But, with economic sanctions ending, the Swiss-based group is making low-key preparations for a big comeback.
Nestlé, the Swiss food group that last month swallowed Pfizer’s infant nutrition business for $11.85bn in order to enlarge its emerging markets presence, is at it again.
On Tuesday, the company said it planned to invest more than CHF5.3m ($5.7m) in the North African nation of Morocco in a bid to boost its milk collection and production in the region.
The price that Nestlé is paying for Pfizer’s infant nutrition business puts a high value on emerging markets.
The Swiss foods group announced on Monday it would pay the American drugs company $11.85bn for Pfizer Nutrition – the maker of Promil, SMA and S-26 Gold baby food brands, with 85 per cent of its sales in emerging markets.
That’s substantially more than the $10bn mooted last week. But Nestlé was clearly driven into making a bigger offer than it originally intended to see off a rival bid from France’s Danone. Nestlé’s shares were flat on Monday (after going ex-dividend), Pfizer‘s up 1 per cent, and Danone‘s up over 2 per cent. That suggests Nestlé shareholders may be a little concerned about the price – but have no real worries about the EM-focused strategy.
For two years Robert Mugabe’s Zanu-PF has been ratcheting up the pressure on foreign-owned firms demanding that they dispose of a minimum of 51 per cent of their shares to indigenous Zimbabweans. This week’s agreement (in principle) for the localisation of majority ownership of Zimbabwe’s largest exporter Zimplats has the potential to be a gamechanger, economically and politically.
With elections due in the next 18 months, the Zanu-PF will be keen to push on with the programme. So which companies are next in line?