The chairman of the international food and drinks giant Nestle, Rainer Gut, said yesterday that he was confident the company could would improve its performance in 2003, despite what he described as "an unfavourable environment".

In remarks prepared for the company's annual meeting Gut said: "It is clear that we will continue to face an unfavourable environment [but] we are confident that we will be able to improve once more the group's performance this year."

In 2002 Nestle saw its sales increase 5.3% to 89.2 billion Swiss francs (US$64.87 billion). However it has set itself a target of 4% growth in real internal growth, which strips out currency movements, price changes and acquisitions. Last year the company managed only 3.4% growth on these terms.

Despite this Gut said he would sacrifice margins to meet these growth targets.

"We have always stated that we will not take any measures aimed solely at achieving this objective in any one particular year, if such a measure would have a negative effect on margins and profitability," Gut said. He added that Nestle was on target to meet cost saving programmes the company had implemented, which would save it billions of francs over the next few years.

There will also be a continuation of targeted acquisitions to strengthen Nestle's position in key markets, both in terms of geographical spread and range of activities.