Nestle SA (NSRGY) confirmed its medium-term organic growth target Tuesday and boosted its profit margin aims ahead of the group's investor day in London that is expected to highlight some of the pressure recently applied by activist shareholder Third Point LLC.
Nestle said it sees "mid-single digit organic growth" by 2020 and wants to achieve an operating profit margin of between 17.5% and 18.5% over the same time period, up from the 16% target published last year. The group also said it would "accelerate" a previously-announced share buyback program, worth around Sfr20 billion ($20.65 billion), over the next three years.
"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."
Nestle has been under some pressure to follow the path of major brand groups and declare a formal margin target, particularly after Dan Loeb's Third Point hedge fund revealed it had built a 1% stake, worth around $3.5 billion, which would put the group among the ten largest shareholders of the Vevy, Switzerland-based group and said it wants management to pursue a series of options it argues would unlock shareholder value, including the sale of its 23% stake in luxury goods maker L'Oreal SA (LRLCY) .
