Nestle committed to Switzerland despite strong franc

KONOLFINGEN, Switzerland, Sept 1 Thu Sep 1, 2011 9:03am EDT

KONOLFINGEN, Switzerland, Sept 1 (Reuters) - Nestle SA , the world's biggest food group, said it would continue to invest in its home country Switzerland, although the strong franc made it less attractive.

"There are lots of discussions at the moment about the crisis in Europe, weak consumer confidence and the strong Swiss franc. There are many reasons to feel uncertain but even in a region like Europe it is still possible to grow," Chief Executive Paul Bulcke said as he opened a factory near Bern.

Asked whether the company would postpone or even cancel investment projects in Switzerland because of the franc, Bulcke said: "Saying the Swiss franc has no impact at all would be wrong. But as a global company, we have a natural hedge.

"It is not the Swiss franc that is strong, it is all others that are weak, shame on them. But one day, I hope, rationality will come back," he said, adding Nestle was investing for the long term.

Nestle on Thursday inaugurated a new production unit in Konolfingen, the site of its oldest factory, where it will produce probiotic infant formulas for its nutrition business.

"The Swiss franc is obviously not helping Nestle for its production in Switzerland," Bulcke said, repeating the currency only had a limited impact on Nestle operating performance.

The franc has soared against the euro and dollar in recent months, prompting the Swiss National Bank to flood the market with franc liquidity in a bid to stem the rise of the currency that makes Swiss exports more expensive abroad.

Two thirds of the products made in Nestle's 10 Swiss factories are exported to the euro zone and the franc is making it more difficult to stay competitive, said Eugenio Simioni, head of Nestle Switzerland, adding that innovation capacity and quality of service were helping compensate.

Nestle has invested 400 million francs ($496 million) in Konolfingen over the last four years and doubled the number of jobs to 770.

Nestle's nutrition business generates about 90 percent of its sales from baby formula and Bulcke said the group was interested in buys for the unit that had sales of 10.4 billion francs last year.

He declined comment on possible interest in Pfizer's Wyeth baby formula business, which is up for sale and could be worth up to $10 billion. ($1 = 0.806 franc) (Editing by David Holmes)

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