Nestle runs into trouble in China (NSRGY 2Q05 conf call quotes)

by: Ezra Marbach

Nestle (ticker: NSRGY.PK) EVP Wolfgang Reichenberger discussed the underlying issue during management's Q2 2005 earnings results conference call:

....we had, I think, this was known in the press since late May that we had a product exchange; we had an issue which was not a health issue, it was a regulatory issue inasmuch that, for certain products, the level of iodine, which is a positive ingredient we added here in Europe to salt for example, these levels of iodine in certain milk products have exceeded the very tough levels set by Chinese authorities. The international acceptable levels are much higher, but obviously we have to agree, we have to conform with the regulations in each country in which we operate, also in China, so we had to take products which exceeded those tough Chinese standards and exchange them with products which obviously were conforming. And from here on it's clear that we'll take very good care to observe those standards, as tough as they may be.

....that has had an impact, obviously, on our sales in the last two months or so, and since not only the milk products, also some other products which are Nestle branded have been affected we are now planning heavy activities, and they have already started, to regain that lost territory…..

(Quotes are from the CCBN StreetEvents transcript.)

NSRGY.PK

Nestle

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