Nestle shares are higher Monday as the firm moved to reassure its investors that it remains committed to rolling out a new strategy, as quickly as possible. The development comes after activist investor, Third Point urged the firm to deliver better value for money to investors and drive the company forward, more quickly.
By 1500 BST, Nestle shares were 0.73% higher at CHF77.46. The stock has been moving broadly higher in recent weeks.
Nestle accelerates transformation plan
In a press release Monday, Nestle said its value creation process is ongoing and moving forward as quickly as possible. It laid out seven separate points of development in its new plan over the past year. They included:
- Installing a new CEO.
- Delivering revenue growth in a challenging environment.
- Continued brand investment and innovation.
- Accelerated its restructuring and improved operational efficiency.
- Good level of capital returns for investors.
“Nestlé’s Board of Directors and management team are implementing an accelerated long-term value creation strategy for one of the world’s leading global consumer goods companies,” Nestle said. “Through swift and decisive action, the company’s Board and management are delivering results.”
Third Point says Nestle can do better
Nestle’s press release was in response to a letter from investor Third Point at the end of last week. The investment Fund holds around 40 million shares of Nestle, worth some $3.5 billion.
In its letter to investors, Third Point outlines all the positive points about Nestle. However, it then goes on to detail its disappointment in the underperformance of the company’s shares.
“Despite having arguably the best positioned portfolio in the consumer-packaged goods industry, Nestle shares have significantly underperformed most of their US and European staples peers on a three, five and ten-year total shareholder returns basis,” Third Points letter said.
“Third Point intends to be an engaged, long-term shareholder and offer our assistance to the management team and board as they pursue improved performance for all stakeholders,” it said.