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Nestle announced on Wednesday new cost savings as part of efforts to cope with increasing competition and to make its sprawling business more 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 ($2.5 billion) in savings over the next three years, in areas such as procurement and factory efficiency. It expects a 200 basis point reduction in costs as a percentage of sales by 2019/2020.
Like rivals, Nestle is coping with a sluggish economic environment and more demanding consumers in emerging markets, particularly China, where it was caught off-guard by how fast consumers embraced e-commerce and healthier foods.
In several cases it has lost market share to small, local rivals that can adapt more quickly than Nestle, which sells thousands of products around the world, with annual sales of about $90 billion.
The target may go some way toward satisfying investors that have grown concerned of late, after Nestle has missed its long-term 5 to 6 percent growth rate for three years, and has also recently not given very detailed margin improvement plans.
The company said there was no change to its 2016 forecast of top line growth in line with 2015, when sales rose 4.2 percent.

Copyright Reuters, 2016

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