Nestle Will Move Infant Nutrition Unit to Regionally Managed Business -- Update

Nestle SA (NESN.EB) on Wednesday announced a shake-up of its infant-nutrition business, as the packaged-food company tries to prioritize faster growing parts of its business amid sluggish overall sales.

Infant nutrition will move from the global-nutrition division to a regionally managed business starting Jan. 1, Nestle said. A strategic business unit will be created to implement the company's nutrition strategy.

"The new organization will allow Nestle's infant nutrition business to deliver accelerated organic growth and realize further efficiency gains," Nestle said. "The more agile and efficient structure will enable Nestle to respond faster to rapidly changing local consumer preferences, evolving regulation, and customer and channel demand for tailor-made solutions."

Heiko Schipper, head of Nestle Nutrition, will leave the company. His position on the executive board won't be replaced under the reorganization of the infant-nutrition unit, Nestle said.

The reorganization is the latest in a string of moves launched by Chief Executive Mark Schneider. Since taking the reins in January, Mr. Schneider has ditched a longstanding sales growth target, put Nestle's U.S. confectionery business up for sale, made a series of U.S. acquisitions to beef up its coffee and specialty food businesses and announced a 20 billion Swiss franc ($20.13 billion) share buyback.

The moves have come amid pressure from activist investors, led by Daniel Loeb's Third Point LLC, to boost profits at a time when large, packaged-food companies confront changing consumer tastes and weaker sales in mass-produced, prepared dishes that have long been a Nestle staple.

In June, Nestle said it would focus its investment spending on faster-growing parts of its business including pet care, bottled water and coffee in addition to infant nutrition. Nestle's overall nutrition business generated CHF10.3 billion of the company's total CHF89.5 billion in 2016 sales.

Nestle also said Wednesday that Chief Technology Officer Stefan Catsicas will leave the company and be replaced by Stefan Palzer, who currently heads the company's research center.

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

(END) Dow Jones Newswires

November 15, 2017 04:53 ET (09:53 GMT)