NSRGY Nestle SA (PK)

By Brian Blackstone

VEVEY, Switzerland--Nestle SA (NESN.EB) is committed to its "ambition" of organic sales growth of between 5% and 6% despite falling short in recent years, the company's chief executive, Paul Bulcke, said Thursday.

Faster global economic growth and an end to deflationary headwinds would help Nestle get back to its long-term revenue objective dubbed the "Nestle model," Mr. Bulcke told The Wall Street Journal in an interview at the company's headquarters in Vevey, Switzerland, along Lake Geneva.

"I do believe that in normal conditions that 5%-6% is definitely something we have to aspire to," Mr. Bulcke said. "We're living in quite special conditions. Everyone has to admit that.

"I will not...take it from the table as an ambition," said Mr. Bulcke, who will leave his post after more than eight years as CEO at the end of the year and become Nestle board chairman next year. He joined Nestle in 1979 as a marketing trainee and steadily rose through the ranks, becoming CEO in 2008.

Under his stewardship, Nestle weathered the global financial crisis and its aftermath as a mix of rising prices, strong growth in emerging markets and popularity of brands such as Nespresso boosted revenue.

But some of those global economic forces reversed in recent years. The company has missed its 5%-6% organic sales growth target--which strips out currencies and acquisitions--for three years running, and Nestle said Thursday that it will fall short again this year with expected growth of 3.5%.

"Bulcke has been fighting fires over the last three or four years," said Jon Cox, head of Swiss equities at Kepler Cheuvreux. "He inherited a business that did very well up until 2012. After 2013 he has been struggling to get growth back in a much more competitive environment."

Looking back at his CEO tenure, Mr. Bulcke said one frustration is that the company wasn't always quick to respond to fast-changing consumer needs, citing Nestle brands Lean Cuisine and Stouffer's as examples.

Still, he pointed to areas of innovation where he thinks Nestle is poised to prosper. One of the company's most prominent moves under Mr. Bulcke's stewardship has been a shift into health sciences and medical foods, which include prescription-based powders and drinks intended to treat diseases such as Alzheimer's and intestinal disorders.

"I think this company is stronger, and is going to get out of this a little bit depressed environment stronger," he said.

Mr. Bulcke will be succeeded on Jan. 1 by Ulf Mark Schneider, who headed German health-care company Fresenius SE before joining Nestle in September.

Write to Brian Blackstone at brian.blackstone@wsj.com

(END) Dow Jones Newswires

October 20, 2016 07:03 ET (11:03 GMT)

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