Nestle sees slightly faster recovery

BROC, Switzerland (Reuters) - Nestle chief executive Paul Bulcke expects the global economy to recover a little faster then first thought, helping to boost sales growth at the world's biggest food group, especially in late 2009.

The Swiss maker of Nespresso coffee, Carnation milk and Maggi sauces sees the pickup coming from its nutrition and developing world businesses as it invests heavily in brand marketing ahead of the anticipated upturn.

Belgium-born Bulcke said the group had a variety of options in mind for the cash from the likely $28 billion sale of its 52 percent stake in U.S. eyecare group Alcon, but appeared to rule out a counterbid for Cadbury by sticking to its plans for no major acquisitions in 2009 and 2010.

"You read about these green shoots and then you read that these shoots don't blossom, but I do believe we're going to come out of this a little bit faster than we thought," Bulcke told Reuters at the opening of a new research center for luxury chocolate in the Swiss town of Broc.

H2 SEEN STRONGER

"The developing world and emerging markets in general are showing nice signs of (reviving)... Europe is going to take a little bit longer."

Nestle shares were up 0.3 percent at 1500 GMT on a day when most European food shares rose on Kraft's bid for Cadbury.

Bulcke was happy with analysts' forecasts for underlying 2009 sales growth of 4.1 percent, up from a lower-than-expected 3.5 percent in the first half.

"(We feel) the latter part of the year is going to give us an easier comparison," he added, referring to the slower growth rate posted in the fourth quarter of 2008.

The maker of Kitkat chocolate bars and Haagen-Dazs ice cream had trimmed its target for 2009 underlying sales growth to around 4.1 percent from "at least approaching 5 percent."

NO CADBURY COUNTERBID?

Bulcke declined comment on whether Nestle might counterbid for Cadbury after the British confectionery group rejected a 10.2 billion pound offer from U.S.-based Kraft, but he reiterated that it planned no big acquisitions.

"We are always open for opportunities, but we have no plans for any major acquisitions in 2009 and 2010," he said.

Bulcke also repeated Nestle's guidance for raw material prices to rise 2 percent this year, with commodity price rises in general slowing.

But volatility might increase, with prices rising again in the longer term, particularly for milk, "so growth is going to come in more dynamically from volume growth."

SHAREHOLDER PAYOUT?

Bulcke said Nestle is still considering how it might spend the proceeds from the expected Alcon sale.

"We have ... we take good care (of) our shareholders but also that we are very aware of our cash flow position and strong balance sheet. It's going to be a combination of usages," he said.

Last year, Nestle sold 25 percent of Alcon for $11 billion in cash to Swiss drugmaker Novartis, which has an option to buy Nestle's remaining 52 percent stake between January 2010 and July 2011 at a likely price of $181 per share.

Analysts say that, with no transformational deal on the horizon, Nestle may consider a new share buyback program, a special dividend or a rise its dividend payout ratio, or a combination of all three for the future.

Bulcke, 54, took over as CEO in April 2008 from Peter Brabeck, who has continued as chairman after turning the Americas into Nestle's biggest and most profitable region.

Bulcke joined Nestle to see the world and spent 16 years in Latin America before returning to Europe.

Bulcke said the downturn had not hurt demand for premium chocolate much and sees demand continuing to grow, particularly for dark chocolate, where Nestle is world number 1.

Bulcke said his favorite Nestle brand was its new "Chocolate Noir," but declined to say whether he preferred Swiss or Belgian chocolate. "When I was young I loved Belgian chocolate. Now I love Swiss chocolate too."

(Reporting by David Jones; editing by John Stonestreet)