* H1 net profit 5.1 bln Sfr, in line with forecasts
* Sales 45.2 bln Sfr, 4.1 pct organic growth misses poll
* Says 5 pct organic growth in full year "a stretch"
* Says does not see further margin improvement in H2
* Shares down 2.2 pct, underperform market (Adds CFO, analyst comments, shares)
By Silke Koltrowitz
ZURICH, Aug 8 (Reuters) - Nestle, the world's biggest food group, missed first-half sales forecasts and trimmed its 2013 target on Thursday after it cut some prices in Europe in a bid to lure recession-hit shoppers.
The figures suggested a sharp slowdown in second-quarter sales growth - to the lowest rate in over three years, according to analysts - and that a reduction in some prices due to lower commodity costs had yet to tempt Europeans to spend more.
The Swiss maker of KitKat chocolate bars and Nescafe coffee also reported a slowdown in sales growth in emerging markets, echoing a pattern seen at other consumer goods companies.
However, formerly best-in-the-class Nestle is struggling more than rivals like Unilever and Danone , which are benefiting from their strength in better-performing cosmetics and baby food markets respectively.
"Compared with its direct peers, Nestle's Q2/H1 2013 results look rather soft ... We are inclined to reiterate our relative preference for Danone and Unilever," Helvea analyst Andreas von Arx said in a research note.
At 1015 GMT, Nestle shares were down 2.2 percent at 63.3 Swiss francs, among the biggest falls by a European blue-chip stock.
The Vevey-based firm said underlying sales rose 4.1 percent in the first half, lagging a forecast for 4.6 percent in a Reuters poll, and implying a deterioration from 4.3 percent in the first quarter, mainly due to weakness in Europe.
It cut its full-year target to around 5 percent from its long-term 5-6 percent goal, and on a conference call, its chief financial officer said even the new guidance would be tough.
"I'm fairly new to the organisation ... some of my colleagues are optimistic we can make that number but it's not going to be easy, it's going to be a stretch," said Wan Ling Martello, who took over as CFO in April last year.
She said lower input costs and efficiency gains had helped to lift the operating margin by 20 basis points to 15.1 percent despite the modest underlying sales growth, but said she didn't see a further improvement in the margin in the second half.
Underlying sales growth, which strips out currency swings and the impact of acquisitions, was composed of 2.7 percent volume growth and a 1.4 percent contribution from pricing. The latter was held back by weakness in Europe, where the group passed on lower coffee prices to consumers.
"Pricing growth (in the quarter) was the lowest for over a decade ... and brings fears of a collapse in pricing in coming quarters," said Bernstein analyst Andrew Wood.
Nestle, which also makes Maggi soups and Pure Life water, said first-half net profit rose 3.7 percent to 5.1 billion Swiss francs ($5.5 billion), while total sales reached 45.2 billion francs, both in line with estimates.
Underlying sales growth in Europe, however, slowed to 0.6 percent, from 1.0 percent in the first quarter, with growth in Germany and Britain offset by weakness in other markets.
Nestle is hoping price cuts will boost sales volumes in Europe in the second half, as well as investment in its brands. Marketing spending was up 60 basis points in the first half.
Growth in emerging markets also slowed to 8.2 percent, from 8.4 percent in the first quarter. However, the group said it expected growth in its Asia, Oceania and Africa (AOA) region to pick up in the second half.
There was only a slightly positive impact from price changes in China in the first half, but volume growth was good, it said.
Nestle's overall figures compared with the 6.5 percent increase in quarterly sales reported by Danone and a 5 percent rise at Unilever.
Nestle's margin was slightly down in Europe, but up in the Americas and AOA, helped by lower input costs. The group still expects a low single-digit increase in input costs for the whole year, noting that comparables are getting tougher.
Martello said a share buyback was "not off the table" even though the group had no programme currently, and it would look at it on an opportunistic basis. She also said Nestle wanted to go on increasing its dividend in absolute terms every year.
Nestle shares are trading at 17.7 times forward earnings, at a discount to Danone at 18.5 times, Unilever at 18.1 times and Kraft Foods at 18.6 times.
The company on Wednesday escaped a fine for price-fixing by milk-powder producers as it cooperated with authorities and cut prices of its products.
$1 = 0.9230 Swiss francs Editing by David Cowell and Mark Potter