Nestlé to explore strategic options for Skin Health unit, reaffirms importance of Health Science division

20 Sep 2018 --- Nestlé is exploring strategic options for its Skin Health unit, after the company’s board concluded that the future growth opportunities of Nestlé Skin Health increasingly lie outside the group’s strategic scope. The company has come under increased pressure from shareholders to overhaul its strategy following disappointing 2017 results, with the company reporting its lowest sales growth in more than two decades. The strategic review is expected to be completed by mid-2019.

During its regular strategy review earlier this year, the Board of Directors confirmed the company’s strategic direction to sharpen its focus on food, beverage and nutritional health products.

“Sharpening our strategic focus on Nestlé’s core food, beverage and nutritional health products offers the best opportunity for long-term profitable growth and is fully in line with the pursuit of our company’s purpose,” says Paul Bulcke, Chairman of Nestlé’s Board. “As a consequence, our Board is convinced that exploring strategic options for Nestlé Skin Health is in the best long-term interest of this business and Nestlé shareholders.”

“Nestlé Skin Health has made significant progress under its new leadership team over the past two years. The company has developed convincing growth strategies for each of its business units and regained a competitive cost structure. Now is the right time to explore the best ownership structure for Nestlé Skin Health and to consider ways of taking it to the next level,” says Mark Schneider, CEO.

The move raises questions about the future of its ties with the world’s biggest cosmetics firm, L’Oreal.

In February, L’Oreal declared its readiness to buy Nestle’s 23 percent stake in the firm were it to sell, saying it had access to cash and funding at its disposal.

L’Oreal said it could finance a purchase of the holding, worth approximately US$27.4 billion, with cash, by selling its stake in French drugmaker group Sanofi or through borrowing if needed, Reuters reported at the time.

Although Nestlé has ruled out increasing its stake in L’Oréal, it has also disregarded calls to decrease its stake.

Health Science focus
As part of the strategic review, the Board re-affirmed and emphasized the strategic importance of Nestlé Health Science, it's nutritional health business which focuses on medical nutrition and consumer health products.

Earlier this year, Nestlé acquired Atrium Innovations, thereby expanding and complementing its line of nutritional products such as the brands' BOOST, Nutren, Meritene and Peptamen. 

Nestlé intends to continue to allocate “significant resources” to this growth area.

Headquartered in Lausanne, Switzerland, Nestlé Skin Health employs more than 5,000 people across 40 countries. The division had sales of around CHF2.7 billion (US$ 2,79 billion) in 2017.

Nestlé Skin Health provides science-based solutions to meet the specific skin health needs of healthcare professionals, patients and consumers.

It offers a range of leading medical and consumer brands through three complementary business units, including Epiduo and Soolantra in Prescription, Restylane and Azzalure in Aesthetics, Cetaphil and Proactiv in Consumer Care.