Nestlé (NESN) H1 2025 earnings summary

Executive summary

• Achieved 2.9% organic sales growth in H1 2025, with pricing up 2.7% and RIG at 0.2%, despite a challenging macro environment and FX headwinds.

• Reported sales declined 1.8% to CHF 44.2 billion, mainly due to a 4.7% negative FX impact.

• Net profit declined 10.3% to CHF 5.1 billion, and basic EPS fell 9.0% to CHF 1.97, impacted by lower profit and the end of the share buyback program.

• Maintained full-year guidance for organic growth and UTOP margin at or above 16%, with continued focus on efficiency, premiumization, and innovation.

• Strategic initiatives included increased marketing investment, innovation 'big bets', and addressing underperforming business cells.

Financial highlights

• Underlying trading operating profit (UTOP) margin was 16.5% in H1 2025, down 90 bps year-over-year.

• Gross profit margin declined 60 bps to 46.6% due to higher input costs.

• Free cash flow dropped to CHF 2.3 billion, mainly due to lower EBITDA and higher working capital requirements.

• Net debt increased to CHF 60.0 billion, primarily due to dividend payments and FX impacts.

• Underlying EPS was CHF 2.27, down from CHF 2.40 in H1 2024.

Outlook and guidance

• 2025 guidance maintained: organic sales growth expected to improve over 2024, with UTOP margin at or above 16%.

• Medium-term target remains 4%+ organic growth in normal market conditions and UTOP margin of 17%+.

• Second half margins expected to be lower due to higher input costs, tariffs, and FX headwinds.

• Guidance includes current tariffs and FX rates; future changes not included.

• Continued investment in growth and efficiency programs.