Nestlé, the world’s largest packaged foods maker, is counting on new products and price increases in the second half of the year to meet its full-year sales growth target after a weaker than expected first half, the company said yesterday.

The company has missed its long-term target of five-six per cent annual sales growth for three years but it said it still expects organic growth this year will be in line with the 4.2 per cent seen last year.

Organic sales growth, which excludes the impact of acquisitions, divestitures and currency, slowed to 3.1 per cent in the second quarter, hit by weakness in China and deflation in Europe, while growth in the first half was 3.5 per cent.

But chief financial officer Francois-Xavier Roger said he thought pricing had hit the bottom in the second quarter and, to underscore the importance of innovation, explained that a third of Nestlé sales came from products new to the market in the last two years.

New products often fetch higher prices, which in turn boost profit margins

New products often fetch higher prices, which in turn boost profit margins.

The maker of Kit Kat chocolate bars and Maggi noodles has also been cutting costs, shedding underperforming businesses and expanding its presence in the more profitable and faster-growing market for healthcare products.

Faced with more demanding consumers asking for fresh, healthy products, makers of packaged foods are reformulating recipes, cutting sugar, salt and fat.

To accelerate its health push, Nestlé recruited Ulf Mark Schneider from German healthcare group Fresenius as its next chief executive.

“In our view, the Nestlé investment case hinges on incoming CEO Ulf Mark Schneider, who takes over on January 1, 2017. In the meantime, though, we regard this as a competent set of results,” RBC Europe analyst James Edwardes Jones said in a note.

Asked whether Nestlé would increase its dividend this year, Roger only said Nestlé had done so in the past despite the strong Swiss franc.