Weak sales raise pressure on Nestle boss to speed up overhaul
Nestle trimmed its 2017 sales forecast to what would be its weakest growth in 20 years, adding fuel to calls on chief executive Mark Schneider to speed up a turnaround of the world's largest food group.
Since taking control of the maker of KitKat bars and Nescafe coffee in January, Schneider has faced calls to improve its performance, led by activist investor Daniel Loeb, whose US hedge fund disclosed a $3.5 billion stake in June.
Nestle has been cutting costs, making small-scale investments in health science companies and last month announced a large share buyback plan in an effort to boost returns.
Global food companies have been battling slowing sales as consumers' tastes change, and Nestle has been accused of responding more slowly than peers such as Unilever and Danone, which have bought faster-growth companies with products aimed at health-conscious millennials.
Nestle reflected these difficulties on Thursday when it said it expected 2017 sales growth to be "in the lower half" of its 2 to 4 percent target range.
The company's organic sales growth has slowed over the last four years, leading to Schneider scrapping a long term target of 4 to 5 percent growth. A slowdown to the bottom half of 2 to 4 percent would be Nestle's weakest growth in more than 20 years.
Nestle said its organic sales, which includes volume and price increases, grew by 2.3 percent in the first half, the same rate as the first quarter, trailing analyst estimates of 2.8 percent and slowing from 3.5 percent a year earlier.
Schneider, who is expected to unveil more of his strategy at an investor day in September, said he was disappointed.
"Organic growth in the first half did not fully meet our expectations ... While volume growth remains at the high end of our industry, pricing continues to be soft," he said.