Food and drinks giant Nestle said today it has set an underlying trading operating profit margin target of 17.5 per cent to 18.5 per cent by 2020.
Achieving the goal would be a rise on last year's 16 per cent. Nestle also reconfirmed its target for mid-single digit organic sales growth by 2020.
The strategic shift is part of an update to be laid out in London by chief executive Mark Schneider today, with food and drinks to "remain core to the company's strategy, with a continued focus on nutrition, health and wellness enabling the company to meet changing consumer demands".
Investors are awaiting a clear sign that Nestle can boost performance amid competitive pressures in the sector, and the difficulty of catering for changing consumer tastes.
In June, activist hedge fund Third Point announced it had picked up a 1.25 per cent stake in Nestle, worth $3.5bn (£2.7bn), and would be seeking ambitious changes at the firm.
The hedge fund proposed a four-point plan, aiming to drive operating margins from 15 per cent to more than 20 per cent, through selling off certain assets such as the US confectionery operations (which Nestle was already planning), selling the stake in L'Oréal, and return cash to shareholders via share buybacks.
The Swiss maker of KitKat said today its strategy balances growth with "increased cost discipline and margin expansion, as well as improved capital efficiency".
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 said that in light of its strong cash generation, it intends to accelerate share buybacks, worth up to SFr20bn (£15bn), by spreading them evenly over three years.