(News Bulletin 247) – The Swiss agri-food giant is making progress on the Zurich Stock Exchange after announcing quarterly revenues above expectations, which allows it to renew its 2025 outlook.

Nestlé has had a turbulent start to the year. Last month, the Swiss food giant fired its CEO due to an “undeclared romantic relationship with a direct report” and had to accept the resignation of its president a few weeks later.

The group, which has more than 2,000 brands, has been swimming in troubled waters for several years. Since mid-2022, Nestlé has suffered a severe slowdown in its growth. At the end of July, the company revealed a 1.8% decline in its turnover in published data, which was lower than expected.

In this context, the group was expected to turn the corner on the content of its financial performances announced this Thursday, October 16, with a reshuffled staff at its head. And to the delight of investors, Nestlé created a surprise, with summer activity which came in higher than expectations.

Growth above expectations

Between July and the end of September, turnover increased by 4.3% on a comparable basis to 21.641 billion Swiss francs. Which is well above the forecasts of financial analysts who expected on average an increase in turnover of 3.7% on a comparable basis.

Oddo BHF notes that growth in accounting data for the third quarter clearly improves compared to the first quarter (+2.8%) and the second (+3%) thanks to the volume/price effect of 1.5%.

“In the third quarter, Nespresso posted the best results, supported by its performance in the United States. We are seeing some lag effects during the quarter, the magnitude of which is however not yet quantified. Nestlé Health Science’s growth also exceeded expectations, thanks to strong growth in Active Nutrition and improving momentum at Nature’s Bounty. The strategic review of its consumer and economy brands in the supplements space food is still in progress”, details Royal Bank of Canada.

“Beyond the good surprise on organic growth in the third quarter, we note that all categories and all geographic areas, with the exception of China, posted a positive volume/mix in the third quarter even if this remains below the levels that we have the right to expect from a group like Nestlé,” notes Oddo BHF.

“This third quarter should be well received, it is above expectations, of quality in terms of volume/mix and preserves the short-term status quo which is what Nestlé needs most,” indicated the financial intermediary before the markets opened.

Indeed, Nestlé jumped by more than 8% on the Zurich Stock Exchange. The group also confirmed its objectives for the current year and raised its cost reduction objective by 2027.

Prospects confirmed

Nestlé confirms its 2025 objectives, namely organic growth higher than that of 2024 (2.3%) and a current operating margin equal to or greater than 16%. This figure takes into account the negative effects of current tariffs and exchange rates.

On the sidelines of this publication Philipp Navratil, the new general director of Nestlé who took office last month, indicated that he gave “priority to growth”. Royal Bank of Canada welcomes Philpp Navratil’s ambition to promote a culture that does not accept loss of market share and rewards success, which seems more assertive than before.

“The world is changing and Nestlé must adapt more quickly”, which will involve “making difficult, but necessary, decisions to reduce the workforce”, he also declared. The company has announced the elimination of 16,000 positions worldwide over the next two years.

Nestlé has thus raised its cost reduction objective by 2027 to 3 billion Swiss francs compared to 2.5 billion previously.