Nestlé is confident it can fully recover lost sales from the infant-formula recall that drove a sequential slowdown in its first-quarter organic growth.
Organic growth (OG) came in at 3.5%, easing from the 4% pace in the fourth quarter of 2025 as the recall mainly weighed on sales in Europe and China. Otherwise, Nestlé delivered a positive set of results led by coffee, which was described today (23 April) as the “star” performer.
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While Nestlé’s share price reacted accordingly – up 6% as of 13:24 BST – CFO Anna Manz told analysts infant-formula sales are “currently” down about 10% as the impact from the recall was confirmed as around 90 basis points on the organic numbers and real internal growth (RIG).
However, Manz said Nestlé is “already seeing early signs of improvement and expect to fully recover by the end of the year”.
Introducing the results today, CEO Philipp Navratil said the first-quarter “performance demonstrates that our RIG-led growth strategy is delivering in a complex and uncertain environment”, namely the conflict in the Middle East.
RIG, which strips out the effect of pricing from organic growth, “was positive across all zones and categories”, except infant formula within nutrition (RIG -3.5%), which was impacted by the recall. By category, coffee (3.5%) was “the star, with recovering volumes and positive mix”.
Navratil added the availability of Nestlé infant formula “is back to normal” following the recall, which kicked off late in December and early January due to the presence of the toxin cereulide and drew in other manufacturers such as Danone and Lactalis.
Manz said the recall accounted for all of the first-quarter sales slowdown, adding that growth is “still impacted by the continued correction of trade inventory in China”.
Of the 90-point impact, she said about half was linked to the effects of sales returns, temporary stock shortages and “subsequent replenishment”, while the remainder was due to “lower consumer demand”.
Nestlé stuck with its financial guidance for the full year for organic growth of “around 3% up to 4%”, RIG “accelerating” versus 2025, and expectations the underlying trading operating profit margin (UTOP) will “improve” from last year’s 16.1%.
RIG was 1.2% in the first quarter based on sales of SFr21.32bn ($27.1bn), led by SFr6.18bn for the food and snacks division and SFr6bn in coffee.
“It is clear that geopolitical and macroeconomic uncertainties have increased,” Navratil said as analysts pressed that the outlook might have been more bullish had it not been for the conflict.
Manz explained: “The conflict in the Middle East will have some impact on commodity and distribution costs and possibly on consumer behaviour but it’s too early to know the full extent of this.
“We did take some very significant price last year, and on coffee and cocoa, we will not be taking price on coffee and cocoa in the context of commodity increases there at the same level. But the external environment is uncertain, and our guidance reflects that uncertainty.”
Impacts will likely take the form of supply chain disruption and commodity inflation, both of which Nestlé is “seeing come off”, she said, adding there will potentially be a “knock-on impact” on the consumer.
Nevertheless, Manz was confident Nestlé can weather the storm.
“The combination of our scale and the fact that we largely manufacture locally means that when there is global supply chain disruption, normally Nestlé gains share because we are more able to navigate that environment than others.
“We’re well practiced on the levers to manage commodity cost increases because we’ve been doing that heavily on coffee and cocoa through 2025. So you’ll see us use those same levers of price pack architecture and making sure that we’re delivering for the consumer.”
Meanwhile, emerging markets, excluding China (38% of first-quarter sales) outperformed developing countries (57%) in the quarter. They posted organic growth of 6.8% compared to 2.8%.
“In developed markets, growth is a bit lower, reflecting the softer macroeconomic environment and weaker consumer confidence but our performance versus our categories is improving,” Manz said.
For food and snacks, she added: “Organic growth has been relatively stable over the last five quarters, but the quality of that growth has been improving.
“RIG was negative in Q1 and Q2 last year but has been improving progressively in the last three quarters to reach more than 2% in Q1. A major factor has been our confectionery business returning to growth as we’ve moved through our pricing actions.”
