The company’s board of directors is looking into options for that business, including its sale.
Nestle’s board of directors is looking into various different options concerning its Gerber Life Insurance business. The company has not ruled out selling off the business as it works to try to adjust its product portfolio.
The purpose of Nestle’s efforts is to enhance the effects of a broader organic sales growth strategy.
The portfolio management which includes the decision of whether or not to sell the Gerber Life Insurance business is meant to help Nestle to be able to achieve a 2020 organic sales growth goal. They are working to improve their organic sales growth to a mid-single-digit level by that year.
In 2017, the company’s organic sales growth rate was 2.4 percent. That increase only just barely met the company’s expectations for the year. In the fourth quarter, that figure was only 1.9 percent.
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Upon releasing those figures, the company looked to its Gerber Life Insurance and other areas for improvement.
“Clearly, no beating around the bush, we are disappointed about our Q4 organic sales performance,” said the company’s chief executive officer, Ulf Mark Schneider. That statement was made on February 15 when the company first released its fourth quarter and fiscal year sales results for dates ending on December 31, 2017. “It came in somewhat softer than we had anticipated, and as a result of that, our organic growth for the entire year 2017, while it is inside the guided range, came in somewhat on the softer side.”
Even the 2.4 percent organic sales growth for the fiscal year, which did meet its expectations, if only just, was a drop from the figures in 2016, in which the organic sales growth rate was 3.2 percent. Schneider pointed out that the company is aware that “the incline has become steeper” and that Nestle is now facing a more difficult challenge than it had the year before when it comes to reaching its goal for 2020.
The hope for the current fiscal year is to keep up an organic sales growth rate between 2 percent and 4 percent. The Gerber Life Insurance business is an affiliate of the Gerber Products company known for its baby food and related products. The two are financially independent of each other. Nestle first acquired the life insurer in 2007 from Novartis. Last year, it generated $908 million in sales. That said, Nestle said it is committed to the baby food business and is therefore looking into what it can do with the life insurance company.