By Martinne Geller
VEVEY, Switzerland (Reuters) - Nestle on Wednesday announced new cost-savings as part of efforts to cope with increasing competition and to make its sprawling business more agile and efficient and stood by its long-term annual sales growth target of 5 to 6 percent.
The world's largest packaged food company identified about 2.5 billion Swiss francs (1.71 billion pounds) in operational savings over the next three years, in areas such as procurement, factory efficiency and marketing.
Like its rivals, Nestle is having to cope with a sluggish economic environment and more demanding consumers in emerging markets, particularly China.
In terms of its traditional "Nestle model" which calls for 5 to 6 percent growth per year, the company said it was not backing away from this.
"We mix ambition with targets," Chief Executive Paul Bulcke said at an investor presentation. "We're not backing off from our ambition."
Nestle has missed its long-term target for organic sales growth of 5 to 6 percent for the last three years.
Its stock has fallen 1 percent this year, underperforming the average of the world's top non-cyclical consumer goods companies. But its shares trade at 21.5 times forward earnings, in line with the average.
There are expectations a turnaround in China and an improvement in the United States in Nestle's frozen food business and weak comparisons in India due to last year’s recall of Maggi noodles will help the company return to its growth target by the end of this year.
The company also said it was keeping its guidance for 2016 unchanged. Nestle’s current guidance is for top line growth in line with 2015, when sales rose 4.2 percent.
