Nestlé rises in Zurich: 2025 accounts exceed expectations and reorganisation accelerates

(Il Sole 24 Ore Radiocor)- Positive reception at the Zurich Stock Exchange for Nestlé's 2025 accounts and strategic review. The share price soared. The KitKat and Nespresso producer closed 2025 with organic sales growth of 3.5% to CHF 89.5 billion, higher than expected, with real domestic growth contributing +0.8% and prices 2.8%. At reported level, however, the figure was down 2% from CHF 91.3bn in 2024. Adjusted operating profit was down 4.4% to EUR 14.4bn, weighed down by input costs, higher marketing expenses and the impact of US tariffs. Gross profit margin dropped to 45.6% from 46.7%. Net profit fell 17% to EUR 9.03 billion (from EUR 10.9 billion). Free cash flow stood at 9.2 billion at the end of 2025 from 10.7 billion a year earlier. Net debt improved to 51.4 billion as at 31 December 2025 from 60 billion as at June 2025 and 56 billion as at 31 December 2024, 'mainly reflecting strong free cash flow generation in the second half of 202535 as well as the extraordinary impact of CHF 2 billion from the joint venture with Froneri'.

The proposed dividend is up by 1.6% to CHF 3.10. For 2026, the group expects organic sales growth of 3-4% and free cash flow in excess of CHF 9 billion. "I am encouraged by our 2025 performance, which reflects the initiatives we have taken in a challenging external environment," said ceo Philippe Navratil, who has led the group since last September, saying he was confident that "the acceleration of a more focused strategy will lead to sustained improvement in 2026 and beyond". Nestlé has also updated its strategy, deciding to structure its portfolio into four business areas: coffee, pet care (Petcare, with the Purina, proPlan and Friskies brands), nutrition and culinary products, and snacks, which currently make up around 70% of sales. The Vevey-based giant said it had started "a formal engagement process with potential partners" for the sale of the Waters & Premium Beverages division, which it intends to deconsolidate from 2027. The reorganisation, led by the group's strongest brands, "will foster refocusing, simplification and synergies", allowing Nestlé to accelerate growth, the company stressed. As part of the reorganisation, the Nestlé Health Science (NHS) division will be dissolved and merged with the nutrition division, resulting in the departure of its head, Anna Mohl, from the group. Nestlé is also in advanced negotiations for the sale of its last ice cream business to Froneri. The workforce reduction plan, which envisages cutting 16,000 positions by the end of 2027, the company indicated, is proceeding 'urgently', with 20% of savings already achieved, ahead of schedule. Finally, the Swiss group points out that the 'precautionary recall' of some batches of baby milk, initiated in January, has been completed and production has resumed. 'Better-than-expected' results for 2025 and forecasts for 2026 are a big relief, Vontobel analysts commented. 'Solid free cash flow and reduced net debt provide a solid basis for a fresh start' after management changes and the infant formula scandal, the experts noted. The updated strategy, with growth based on four pillars - coffee, pet products, nutrition, culinary products and snacks - 'could give new impetus and silence the pessimists', they added from Vontobel, although 'this does not mask the continuing difficult market environment, particularly in the US'. Nestle's new strategic plan to reduce the portfolio and focus on four categories seems quite reasonable in perspective, write analysts at Rbc Capital Research in a note