It was a day of change for Nestlé in what seemed more like a capital markets day or the first presentation by a new CEO than an annual results gig.
Philipp Navratil – still relatively fresh in the role having moved up the ranks from the head of Nespresso in September – used an almost two-hour-long call with analysts yesterday (19 February) to provide further details of his strategy plan. And there were a couple of notable developments.
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An exit from ice cream briefly referenced in the results statement got tongues wagging before Navratil clarified a commitment to stay with the Froneri joint venture with PAI Partners.
Nestlé is quitting the leftover parts of ice cream not amalgamated into the partnership, set up in 2016 with the private-equity firm. It is selling businesses in Canada, Chile, Peru, China, Malaysia and Thailand to Froneri.
Navratil also rejigged Nestlé’s structure around four focus areas: coffee, pet food, nutrition, and food and snacks.
Nutrition and Nestlé Health Science will be combined, while there’s now a more holistic approach to food, doing away with separate reporting units for confectionery and prepared foods.
The day started off with a mixed bag of results. Real internal growth (RIG) – a key Nestlé metric that strips out the effect from pricing on the organic numbers – was flat at 0.8%. An unquantified “acceleration” is anticipated in 2026.
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By GlobalDataOrganic growth (OG) did quicken, to 3.5% from 2.2%, with a conservative forecast of 3-4% for the new year. However, another closely watched metric – the underlying trading operating profit margin (UTOP) – was down 1.1 percentage point at 16.1%, while net profit slipped 17% to SFr9.03bn ($11.6bn).
“I’m encouraged by our progress in 2025 but we are far from done. We will continue to push with urgency to deliver stronger performance and long-term value creation,” Navratil said in his opening remarks with analysts.
“The actions we are taking are working, and we need now to go bigger and execute faster. It starts with a winning portfolio. This is the foundation for delivering superior RIG-led growth. This is our most important priority.”
The key takeaways from yesterday’s event start with infant formula as analysts and investors eagerly awaited any insight into the impact from the recall, which began in the final months of Nestlé’s 2025 fiscal year. That they got from CFO Anna Manz, firstly speaking alongside Navratil on a call with analysts and on a further follow-up by the pair with journalists.
Formula recall
The impact on UTOP was SFr75m (totalling SFr14.4bn in 2025), or around ten basis points shaved off the margin. Organic growth and RIG were unaffected “due to the difficulty in estimating the effective volume of returns – this will be recognised in 2026”, Manz said.
In the current first quarter, a one-off SFr200m sales impact is likely to be incurred from “customer returns and stock shortages”, equating to around 90 basis points on the margin. An “additional impact is uncertain and could drive OG towards the lower end of the range”, Manz added in terms of the 2026 outlook.
Navratil was keen to protect Nestlé reputation from the recall, which stemmed from the supply of an oil ingredient, arachidonic acid, from China, the same supplier that prompted other baby powder manufacturers like Lactalis and Danone to recall products, too.
“I want to be clear about an important point. There was no bacteria in our products and the contamination was not caused by bacteria on our production lines,” he said.
“Our production is back at full capacity using alternative ingredient suppliers, and with extensive testing before, during and after production. Supply has largely been restored, and we expect to be fully stocked across all markets in the coming weeks.”
Whatever actions have been taken by Nestlé the longer-term impact on the Swiss group’s reputation remains uncertain.
“It is early to say, this is the uncertainty we have, but we’re very confident that the consumer will come back,” Navratil said when asked during a Q&A session on the potential impact on brand equity.
“I don’t believe, personally, that we will have a long-term issue on the brand equity. it might take some time, but this is a trust that we have to rebuild.”
And on alternative sourcing, the CEO added: “What needs to be important is that all the ingredients we source, independently of where we source ingredients from, have to be of the highest quality, and we have to ensure that when they’re coming to our factories but also when they’re produced in suppliers.
“Our quality assurance in our factories goes way beyond what you can call good manufacturing practices. Our quality standards are, in many places, much more stringent than the legal or the regulatory requirement.”
Navratil did not rule out potential legal action against the supplier when posed with the prospect on the media call.
“We will obviously reserve the right to take legal action. The focus of the company has been on the recall and replenishing the stocks. And then we will see what needs to be done on the legal side and we have not done any provision so far,” he countered.
Strategy
Navratil is framing his plans around a winning portfolio centered on what he called four lenses: “Does the category have an attractive structural growth; do we deliver strong returns in cash flow; are we positioned to win; and are we actually winning?”
The four business areas around that focus will be supported by a SFr600m investment this year. Manz said Nestlé also aims to achieve a target-beating SFr2bn in cost savings this year, building on the SFr1.1bn in 2025.
“We’re not doing a retooling and a restructuring and reorganisation of the matrix,” Navratil explained. “The markets still will report into a zone but we will be clear about who does what in terms of local execution and P&L ownership and global long-term strategic ownership.
“It’s about focus and clarity, and at the same time, simplification.”
Nestlé’s mineral waters’ business has previously been earmarked to undergo change, with the preferred option a partnership.
“The formal process of engaging with potential partners kicked off earlier in Q1 and we expect waters to be deconsolidated for 2027,” Navratil confirmed.
Before Navratil took the helm, Nestlé said in July it had launched a “strategic review of our mainstream and value brands” within the vitamins, minerals and supplements (VMS) business.
Providing an update yesterday, the CEO confirmed: “We continue with the carve out of mainstream VMS. The non-core brands have been identified and we’re working on the operational separation plan, and the formal sale process will commence shortly.”
New nutrition
As Navratil brings nutrition and Nestlé Health Science under one roof as such, he described the units as “two really strong businesses in an attractive category – lots of opportunities”.
A combination will “accelerate our position and performance”.
He added: “We do have an opportunity to increase our focus and drive real synergies and scale by bringing nutrition and Nestlé Health Science together. Doing this will create a single, integrated, global powerhouse like we have in coffee and pet care.
“We’re very strong in specialised infant nutrition with differentiated science and room to grow further. In medical nutrition and premium VMS, we have opportunities to expand geographically.”
Gerber
The Gerber baby brand of cereals, snacks, drinks and jarred and pouched foods has long been considered a disposal risk for Nestlé. Navratil appeared split on whether he would instigate a sale but seemed willing to give the brand a lifeline.
“I’m unhappy with Gerber still. This is still a drag in terms of market share and we’re still not where we should be. The team is working relentlessly to get innovation back on shelves and to revive the brand,” he said.
“I’m not infinitely patient, but we have to give it a try to drive growth in this category. I believe in the category, it’s an essential category when you think about our nutrition portfolio for kids and toddlers.”
Food and snacks
Nestlé’s food and snacks businesses take the form of two individual units in confectionery and prepared dishes and cooking aids. Together, they accounted for almost SFr20bn of total group sales of SFr89.5bn last year (SFr91.4bn in 2024).
Confectionery generated SFr8.7bn (SFr8.5bn in 2025), while prepared foods and cooking aids contributed SFr10.1bn (SFr10.7bn).
Navratil explained the rationale of bringing them together as he said “eating is becoming more fragmented, boundaries are blurring for consumers – the fastest growth value pools now sit between traditional meals and snacks”.
He added: “Going forward, we will look at these categories together. These categories are also less global. We have strong regional positions and leading brands but we still have some work to do to focus within this business and maximise our strength.”
While Nestlé has “global brands” like Maggie noodles, KitKat chocolate and Milo drinks, Navratil also emphasised the important of “local-hero brands with real scale”.
He said: “These are not global billionaire brands but they are very important in their local markets and we will support them in a targeted way.”
Frozen food
Like Gerber, frozen foods have also been the subject of divestment talk in the past. However, unlike the baby-food brand, Navratil stressed his commitment to the segment but with a nuanced approach.
It’s an area in which he has no plans to exit, at least for the time being, because it “delivers strong profitability and excellent cash flow”.
Navratil said further: “Frozen food does not get a clear tick on every box on the four lenses. The key open question is the first, is this a growth category? Currently, it is not.
“The space where we play – frozen snacks, meals and pizza – was flat in 2025 with growth in snacks but small declines in meals and pizza. There are areas with good growth, such as high protein and global flavours. We do see the potential for growth but there are also growth headwinds.”
He said Nestlé plans to innovate in frozen foods to “strengthen” the business in an effort to make it “more valuable whatever the future may hold”.
