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Nestle offers helping hand during crunch

From Juliet Mann, CNN
November 18, 2011 -- Updated 0833 GMT (1633 HKT)
STORY HIGHLIGHTS
  • Nestle has slightly exceeded its growth expectation despite the climate
  • Nestle is expanding micro-credits with suppliers who might struggle to get financed
  • The company says it's financed around $40m of micro-loans to farms

(CNN) -- Food giant Nestle, which has clocked up better than expected growth despite the economic downturn, is now extending micro credit to its suppliers to get them through the tough times.

According to Nestle CEO Paul Bulcke, the move strengthens relationships with suppliers in the long-term, and is worth the short term hit on working capital.

As the economic downturn squeezes credit, the move allows smaller businesses to stay afloat until the wider economy improves. "We're [lending funds to] farmers, for example, who would not get money from the banks," says Bulcke. He says the company has financed around $40 million of micro-loans to farms.

"In a downturn, where credit is harsh and hard, we actually extend that to maintain these relationships and possibly to have these suppliers longer term," Bulcke explains.

Bulcke says Nestle is focused on long term gains, such as the relationship with suppliers. Thinking short term is "deadly," he says.

"We should never compromise the long term for a short term gain," Bulcke says. "In a crisis you are strongly invited to go for the short-term and have a quick fix. I think if that is at the cost of the long-term you don't do favor for your company."

CNN's Emily Smith contributed to this story

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