Earnings
Nestlé beats third-quarter growth forecasts on stronger volumes, and books a CHF 1.4 billion charge as it deconsolidates Russia
Organic sales grew 4.0% against expectations of 3.4%, guidance is unchanged, and the Swiss group put numbers on losing control of its Russian business.
HedgeWeekly News Desk ·
Nestlé's organic sales grew 4.0% in the third quarter, ahead of the 3.4% analysts had expected according to Newsquawk, with real internal growth, the company's gauge of volume and mix, contributing 2.8% and pricing just 1.1%. Reported sales rose to CHF 22.76 billion from CHF 21.64 billion a year earlier, helped by a 1.5% currency tailwind. The Swiss food group kept its 2026 targets of 3% to 4% organic growth, a higher underlying trading operating profit margin than in 2025 and free cash flow above CHF 9 billion.
The pickup was uneven across the map. Zone AOA grew 6.4% organically and Waters & Premium Beverages 12.3%, while Zone Americas managed 3.3% and Zone Europe 1.2%. By category, food and snacks grew 5.0% on volume gains of 5.4% despite slightly negative pricing, coffee grew 3.4% as its pricing contribution eased to 2.0%, and nutrition was close to flat at 0.3%. Chief executive Philipp Navratil said real internal growth was positive in every zone and globally managed business.
Nestlé also quantified the cost of losing control of its Russian business, which Reuters reported Moscow seized last month. The operations, now under temporary external administration and worth about 2% of group sales, were deconsolidated from the end of September. That removes about CHF 1.6 billion of net assets, includes a non-cash charge of about CHF 1.4 billion for currency translation adjustments, and will add about CHF 0.9 billion to year-end 2026 net debt. Separately, the company agreed to sell its mainstream vitamins, minerals and supplements business to Yellow Wood Partners for $1.0 billion, with completion expected in the first half of 2027.
For consumer staples investors, the quarter marks a change in where Nestlé's growth comes from: over nine months real internal growth was 1.9% and pricing 1.8%, so the third quarter tilted clearly toward volume. Currency remains a drag on reported figures, with nine-month sales flat at CHF 65.87 billion after a 3.7% foreign-exchange hit. The Russia deconsolidation and the supplements sale both shrink the reporting base, and with the $1.0 billion of disposal proceeds not due until 2027, the CHF 0.9 billion net-debt effect will show up first in the full-year accounts.