* Organic growth, net profit miss estimates
* Sees organic growth of 2-4 pct in 2018
* No renewal of L'Oreal pact; to keep options open
* Says no intention to increase L'Oreal stake (Adds executive, analyst comments, updates shares.)
VEVEY, Switzerland, Feb 15 (Reuters) - Weakness in North America led Nestle to forecast only modest organic sales growth this year after its slowest gain in at least two decades, giving fuel to investor Daniel Loeb's campaign to overhaul strategy at the world's biggest food group.
Nestle also said it had no intention to increase its 23 percent stake in French cosmetics company L'Oreal but stressed it remained committed to the group.
Shares in the maker of KitKat chocolate bars and Nescafe coffee hit a 10-month low after it said organic growth, which excludes acquisitions and currency moves, was only 2.4 percent in 2017, missing even the lowest estimate of 2.6 percent in a Reuters poll of analysts.
Bernstein analysts, who have a "Market Perform" rating on the stock, said 2017 was the sixth straight year of slowing growth.
"We would hope this is the nadir," they said.
Nestle and rivals such as Unilever have been buying and selling brands and cutting costs to try to improve performance and regain the favour of health-conscious consumers who prefer fresh foods and independent labels to packaged Maggi soups and Buitoni pizzas.
Loeb's hedge fund Third Point took a $3.5 billion Nestle stake last summer and has been pushing to speed up its transformation into a higher-growth, more efficient health food company.
"Work on costs usually kicks in faster than work on growth," Chief Executive Mark Schneider said at Nestle's Swiss headquarters on Lake Geneva, noting a lag between buying a new brand and it contributing to performance.
Nestle's comments on L'Oreal also did nothing to end speculation about the future of a stake worth nearly 23 billion euros.
Nestle said it would not renew an existing shareholder agreement with L'Oreal beyond March 21, allowing it to maintain "all available options". L'Oreal's CEO last week said the company was ready to buy back the Nestle stake, should the Swiss group decide to sell.
Such a sale figured prominently among Loeb's demands.
Nestle also said it will explore strategic options including a sale for its Gerber Life insurance business, which had sales of 840 million Swiss francs ($908 million) last year. It will hold on to Gerber baby food.
"We continue to believe that Nestle has a lot of potential for improvement and a mechanism by which that potential will be realised. But in our view these results don't advance the argument," said RBC Capital Markets analysts.
Shares of Nestle, Europe's second-biggest public company, lost 2.6 percent on Thursday and are down around 8 percent this year. Liberum analysts said they are still expensive, trading at 20.9 times estimated 2018 earnings, a 7 percent premium to the consumer staples sector.
"Investors' expectations for a quick turnaround at Nestle appear fully priced in," said Liberum, which has a "sell" recommendation on the stock.
WEAK NORTH AMERICA, BRAZIL
Nestle's organic sales growth slowed to 1.9 percent in the fourth quarter to Dec. 31, well below the 2.85 percent estimate in the Reuters poll, hit by weakness in North America and Brazil, particularly in waters and nutrition.
"We expect most of these issues to be transitory in nature," Schneider said, forecasting an improvement this year. Still, he gave a wide target for 2018 growth of 2-4 percent, whose mid-point is below the 3.5 percent estimate in the Reuters poll.
Net profit in the full year dropped 16 percent to 7.2 billion Swiss francs, short of the 9.625 billion average poll estimate, hit by a goodwill impairment in its skin health unit "taken to reflect the current prospects of the business".
Schneider would not comment on whether Nestle was still committed to the unit.
He said Nestle's recent purchase of vitamin maker Atrium Innovations and the sale of its U.S. candy business to Ferrero would add 20 basis points to organic growth.
He declined to comment on Nestle's interest in the consumer health businesses being sold by Merck and Pfizer . Reuters reported earlier this month that Nestle had dropped out of the Merck race.
Nestle proposed a dividend of 2.35 francs per share for 2017, also shy of the 2.40 francs average in the poll. ($1 = 0.9251 Swiss francs)
(Additional reporting by Martinne Geller and Helen Reid in London; editing by Alexander Smith and Keith Weir)