Nestlé reveals profit targets for the first time

Food giant Nestle on Tuesday set a formal margin target and confirmed it wants to return to mid-single-digit organic sales growth by 2020.

“The company will detail how it will reach its mid-single digit organic growth target by 2020, and will announce an underlying trading operating profit margin target of 17.5-18.5 percent by 2020,” the Swiss maker of KitKat chocolate bars and Nespresso portioned coffee said ahead of a highly anticipated investor seminar, the first time its new chief executive will lay out his strategy for Europe’s largest company.

Nestle said first half net profits rose 19% to Sfr4.9 billion, modestly ahead of analysts' forecasts of Sfr4.83 billion. Sales for the six months ending in June were pegged at Sfr43 billion, the company said, missing the consensus forecast of Sfr43.77 billion and down from Sfr43.155 billion over the same period last year. Organic growth, however, slowed to 2.3% against a consensus forecast of 2.77%, the company reported.

Investors are looking for proof that Nestle, the world’s largest packaged food company, can improve performance when the sector is battling a slew of upstart brands and changing consumer tastes and habits.

"Nestle has a strong foundation, a clear path forward and a bright future. We have a proven track record of delivering sustainable, industry-leading performance," said CEO Mark Schneider. "In line with today's accelerating pace of change, we are intensifying our focus on innovation, operational efficiency, and portfolio management. We will grow by remaining at the forefront of consumer trends and offering the brands and products to meet people's changing needs, especially their demand for a better, healthier life."

Last week, Nestlé announced it plans to cut up to 450 jobs at a Galderma research and development center in southern France, as it seeks to make the underperforming skin health business more efficient.