Nestle probe 'will not impact profits'
Nestle, the world's largest foodmaker, said a Chinese government investigation into the pricing of infant formula will have no "reasonable material impact" on its margins in China in the long term.
Any effect from the probe will be offset by a bigger growth in its other businesses, chief executive officer Paul Bulcke told a press conference.
The executive also said he doesn't expect the investigation to spill over into other products.
"I don't see any real material impact in the sense that this is a part of a bigger business and bigger growth, so we can handle that," Mr Bulcke said in Chuzhou city in China, where he opened a food factory yesterday.
Nestle's Wyeth unit is one of the at least five foreign milk powder producers being investigated by China's top economic planning agency on possible price-fixing and violating anti-monopoly laws. Danone, Abbott Laboratories, Mead Johnson Nutrition and Dutch producer Royal FrieslandCampina have also been named in the probe and all have announced price reductions, with some by as much as 20pc.
China's National Development and Reform Commission has evidence to show their pricing increased about 30pc since 2008, the same year milk powder contaminated with the chemical melamine killed six infants, according to an official 'People's Daily' report.
Nestle is working with the Chinese government to create a "clear and transparent" regulatory framework for the food industry, including the infant formula sector, Mr Bulcke said. (Bloomberg)