Nestle undecided about future with L'Oreal

By Guy Montague-Jones

- Last updated on GMT

Related tags: L'oréal

Nestle has refused to commit to any long-term plans regarding
its share in L'Oreal, despite claiming its quarter stake in
the world's largest cosmetics company continues to be a 'very good
investment'.

When asked whether L'Oreal was 'financially strategic' at Nestle's half year roadshow, its chief financial officer Paul Polman said: "L'Oreal has been a very good investment for Nestle and continues to be." ​ However, the chief financial officer would not make a long-term commitment to L'Oreal and said it had plenty of time to think about its future with the Cosmetic giant. He said: "It is irresponsible to say now what we do now with L'Oreal when you have this huge benefit of time to think about it properly." ​ Nestle, which owns almost 30 per cent of L'Oreal, last week reported an increase in net profit for the first half of the year of 18.4 per cent, to €3 bn. L'Oreal's contribution to these figures was not revealed, although Reuter's estimates suggest that the cosmetics group enjoyed strong profit growth. L'Oreal will publish its first half results on August 31. Nestle acquired a 26.4 per cent stake in L'Oreal in 2004 and according to Reuters that share has risen to 28.5 per cent. The two companies, which are the world's largest in food and cosmetics respectively, have pursued joint ventures for over thirty years. In 2002 they created Inneov, a business that creates nutritional supplements with cosmetic applications. With products like Inneov Firmness, which is a nutritional supplement that restores firmness to the skin, the two holding companies were able to pull together their respective areas of expertise. L'Oreal is the largest cosmetics company in the world and is likely to remain well placed after securing its position in the naturals market last year when it acquired the Body Shop for a total of €957m. Buying one of the best recognized players in the naturals market has led to strong sales growth in recent quarters. In February, the company said sales were 8.7 per cent to €15.79bn for the fourth quarter.

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