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Nestle to Increase Local Output in Equatorial Africa, CEO Says

Feb. 10 (Bloomberg) -- Nestle SA, the world’s biggest food company, plans to increase the proportion of goods it produces in central Africa fourfold by 2016 to reduce costs, regional Chief Executive Officer Pierre Trouilhat said.

The company expects that 76 percent of products sold in the 20-nation equatorial African region will be produced locally within five years, compared with 19 percent now, Trouilhat said yesterday in an interview in Balaclava, north-west of Port Louis, the Mauritian capital.

“We plan to increase production to 52 percent in 2012 and 76 percent in 2016,” he said. “Opening factories will allow us to have access to local raw materials, offer tailor-made products to locals and these factories are geographically strategically placed to serve other neighboring countries the region and reduce costs,”

Nestle has operated in Africa for 90 years, and has 25 plants on the continent, Trouilhat said. The company’s central African region comprises nations such as Kenya, East Africa’s largest economy, and Angola, the sub-Saharan region’s second-biggest oil producer. Nestle opened a 90 million Swiss franc ($94 million) plant in Nigeria this month and is investing 67 million francs building two additional facilities in South Africa, its biggest market on the continent.

“Our new finishing factory in Kinshasa, Democratic Republic of Congo, which requires a $40 million investment over two phases, will be operating by the end of February,” he said. “A similar project is being put in place in Angola. Both of these units have been designed to evolve to a fully-fledge factory,” he said.

The company, which generated 16 percent of revenue and 18 percent of profit in Asia, Oceania and Africa in fiscal 2009, is upgrading plants in Nairobi, Kenya and Harare, Zimbabwe, he said.

To contact the reporter on this story: Kamlesh Bhuckory in Port Louis via Johannesburg at 1999 or pmrichardson@bloomberg.net

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