Nestlé (NESN) H2 2025 earnings summary

Executive summary

• Organic growth improved to 3.5% in 2025, with positive RIG and pricing, supported by a focused strategy, performance-driven culture, and portfolio optimization, despite significant FX headwinds and macroeconomic challenges.

• Execution accelerated through organizational efficiency, increased marketing investment, and a high-performance culture, with strategic focus on Coffee, Petcare, Nutrition, and Food & Snacks.

• Net profit declined to CHF 9.0 billion, with basic EPS at CHF 3.51, reflecting FX impacts and lower operating profit.

• Major internal reorganization combined Americas and integrated Greater China into AoA; integration of Nutrition and Health Science into a single business.

• The infant formula recall in late 2025/early 2026 impacted UTOP margin and will affect 2026 growth and RIG.

Financial highlights

• Sales reached CHF 89.5 billion, down 2.0% year-over-year due to a 5.7% negative FX impact; organic growth was 3.5% (RIG 0.8%, pricing 2.8%).

• Underlying trading operating profit (UTOP) margin was 16.1%, down 110 bps year-over-year, mainly due to gross margin pressure and increased A&P spend.

• Free cash flow was CHF 9.2 billion, exceeding guidance but down from prior year.

• Net debt reduced by CHF 4.6 billion to CHF 51.4 billion, with leverage at 2.85x net debt/EBITDA.

• Dividend per share proposed at CHF 3.10, up from CHF 3.05.

Outlook and guidance

• 2026 organic growth expected at 3–4%, with RIG accelerating and UTOP margin projected to improve, especially in H2.

• Free cash flow for 2026 forecasted above CHF 9 billion.

• Guidance includes a -20 bps impact from the infant formula recall, with a one-off Q1-26 sales impact of CHF 200 million.

• Ongoing macroeconomic and consumer uncertainty, with self-help measures and execution underpinning confidence.