Nestle shares rose on Thursday after the Swiss food giant reported fourth-quarter organic sales growth that beat analyst expectations and outlined plans to sell its remaining ice cream business as part of a broader portfolio overhaul.
The Vevey-based maker of Nescafé and KitKat posted organic sales growth of 4 percent in the fourth quarter, ahead of a FactSet consensus forecast of 3.55 percent. The stronger-than-expected performance lifted shares by around 3percent in early trade.
For 2026, Nestle said it is targeting organic sales growth of between 3 percent and 4 percent, alongside an improvement in its underlying trading operating profit margin. The margin stood at 16.1% in 2025.
The company also announced plans to sell its remaining ice cream business to Froneri, owner of Häagen-Dazs and a joint venture between private equity firm PAI Partners and Nestle. The move marks a further step in Nestle’s strategy to streamline its sprawling portfolio and focus on higher-growth, higher-margin categories.
In addition, Nestle said it had formally begun the process of divesting its water business earlier in the first quarter. The unit includes brands such as Perrier and Henniez and is expected to be deconsolidated by 2027.
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Under new leadership, Nestle has intensified efforts to sharpen its strategic focus. Chief Executive Philipp Navratil and Chairman Pablo Isla, a former Inditex executive, have been tasked with reinvigorating performance after several years of operational and share-price underperformance.
“We are accelerating our strategy. We are focusing our portfolio on four businesses, led by our strongest brands, with prioritized resources and a simplified organization,” Navratil said in a statement.
The restructuring comes as Nestle works to rebuild investor confidence and address challenges including an infant formula recall that has also affected French rivals Danone and privately held Lactalis. The recall has weighed on growth and required additional costs.
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Nestle said its organic growth guidance for 2026 includes a negative 20 basis point impact from the recall. The company also flagged 1.7 billion Swiss francs (US$1.9 billion) in restructuring items, largely linked to the recall and broader reorganization efforts.
Analysts say the planned disposals of the ice cream and water units signal a more decisive shift toward core categories such as coffee, pet care, nutrition and confectionery segments where Nestle holds strong global brands and pricing power.
The sale of the remaining ice cream stake would further simplify Nestle’s structure, given its existing partnership with Froneri, while the water divestment reflects mounting scrutiny over bottled water operations and profitability.
Investors welcomed the earnings beat and clearer strategic direction, though some cautioned that execution risks remain as the company navigates recalls, divestments and cost pressures.
With organic growth stabilizing and restructuring underway, markets will be watching closely whether the leadership’s streamlined approach can deliver sustained margin expansion and improved shareholder returns in the coming years.
Nestle, founded in 1866 and headquartered in Vevey, Switzerland, is the world’s largest food and beverage company, with operations in nearly every country and a portfolio spanning coffee, confectionery, dairy, pet care, bottled water and nutrition products.
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Over the past decade, the company has faced mounting pressure from investors to simplify its vast portfolio and improve returns. While Nestle owns some of the world’s most recognizable brands — including Nescafé, KitKat, Purina and Maggi — critics have argued that its broad structure has diluted focus and weighed on growth compared with more specialized rivals.
In recent years, Nestle has gradually reshaped its business, divesting underperforming units and doubling down on higher-margin categories such as coffee, pet care and health science. The creation of Froneri in 2016 — a joint venture combining Nestle’s European ice cream operations with private equity firm PAI Partners — was one of the early steps in that strategy. The planned sale of its remaining ice cream stake marks a continuation of that portfolio rationalization.
The bottled water division has also been under strategic review. While brands such as Perrier and San Pellegrino enjoy strong global recognition, the water business has faced margin pressure, environmental scrutiny and rising operational costs. Activist investors and analysts have long questioned whether bottled water fits Nestle’s long-term focus on premium, high-growth categories.
Leadership changes have further accelerated the shift. Under Chief Executive Philipp Navratil and Chairman Pablo Isla, Nestle has signaled a sharper emphasis on operational efficiency, brand prioritization and margin expansion.
At the same time, the company has grappled with reputational and operational challenges. An infant formula recall — which also affected competitors in France — dented consumer confidence and added restructuring costs. Nestle has said the recall will have a modest impact on organic growth but will result in significant one-off charges.
Organic sales growth has been closely watched by investors, particularly as global food companies navigate shifting consumer demand, higher input costs and changing pricing power after a period of elevated inflation. Nestle, like its peers, has relied partly on price increases to support revenue growth in recent years, though volume trends have been uneven in some markets.
The latest restructuring efforts reflect a broader industry trend: multinational consumer goods companies are increasingly narrowing their focus to core, scalable brands with strong global positioning, while divesting non-core or lower-margin units.
As Nestle streamlines its operations, investors will be assessing whether the simplified structure can deliver more consistent growth, improved margins and stronger shareholder returns in a competitive global consumer landscape.
