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Nestle's complexity, though, comes at a price. While the company's long-term growth has outstripped that of many rivals, its margins are lower; "subpar profitability" is how Morgan Stanley analyst Sylvain Massot describes it. Its stock trades at about 15 times estimated 2002 earnings, less than that of Kraft Foods, Kellogg or Hershey Foods, which all trade at price-earnings multiples of about 20. And Nestle ranks far behind Unilever, which trades at 35. Brabeck isn't fazed. "If I had run the company based on the opinion of financial analysts, it would already have been bankrupt...
...Miami last October that was the highlight of its investor-relations campaign. But on the evening before the seminar started, Brabeck let slip over drinks that Nestle had an option to acquire the French cosmetics company L'Oreal in 2004. When the markets opened the next morning, Nestle stock tumbled on fears about what such an acquisition would do to its already growing debt. Brabeck kicked off the seminar with an angry lecture, complaining that his remarks had been misinterpreted and reading aloud extracts from the option agreement with L'Oreal--in French. "He was very emotional," says Andrew Wood...
Indeed, Nestle's stock has been particularly volatile because of concerns among investors that Brabeck's debt-financed acquisition strategy risks overextending the company. Nestle's net debt has quadrupled since Brabeck took over in 1997, to $13.8 billion in 2001, the latest year for which figures are available. The company has nonetheless managed to hang on to its top-shelf, triple-A rating, and Brabeck still gets some respect from Wall Street. "He's done well so far in keeping the top line bubbling and extracting better margins," Wood says. Wood and other analysts--including those at Goldman Sachs...
...Nestle's management structure to pay less attention to national boundaries, and he has begun to get his way. Nestle's water business is now run as a global operation out of Paris, and its eye-care business was spun off as a separate company, Alcon, with its own stock-market listing. Nestle's most futuristic business, an attempt to develop nutritional supplements that enhance beauty, is being pursued as a joint venture with L'Oreal. But Nestle's national organizations still manufacture much of what they sell locally, controlling the chocolate, milk and most other products they sell...
...Singaporean government owns 57% of SIA's stock (some 20% is held by money managers). And while by no accounts does it dictate the airline's strategy, the government aids SIA in many ways. Tax breaks on the carrier's aircraft help SIA maintain one of the youngest fleets of any major airline. The government helpfully paid the multibillion-dollar construction cost of Singapore's impressive Changi Airport, the airline's hub since 1981 and one of the best airports in the world...