Nestle Q1 2025 presentation slides: 2.8% organic growth driven by pricing actions

Introduction & Market Context

Nestle SA (SWX:SIX:NESN) reported its first-quarter 2025 results on April 24, showing modest growth as the food and beverage giant continues to navigate commodity inflation challenges while executing its strategic growth initiatives. The company delivered 2.8% organic growth, largely through pricing actions, as it addressed rising input costs particularly in coffee and cocoa.

The Swiss multinational maintained its full-year guidance despite acknowledging "heightened risks and uncertainty" in the global market environment. Nestle (NSE:NEST)’s performance reflects its ongoing efforts to balance growth with profitability through strategic portfolio management and cost efficiency programs.

Quarterly Performance Highlights

Nestle reported sales of CHF 22.6 billion for the first quarter of 2025, representing a 2.3% increase in reported terms. The organic growth of 2.8% was composed of 0.7% real internal growth (RIG) and 2.1% pricing contribution, indicating the company’s continued reliance on pricing actions to drive growth.

As shown in the following chart of quarterly sales growth:

The company’s growth was slightly offset by a -0.5% foreign exchange impact, while net acquisitions and divestitures contributed a modest 0.1% to overall growth. This represents a stabilization in Nestle’s growth trajectory after the more volatile performance seen in previous quarters.

The comprehensive breakdown of performance by operating segment reveals varying results across the company’s diverse business units:

Category and Regional Performance

Nestle’s performance varied significantly across product categories, with confectionery standing out as the strongest performer with 8.9% organic growth, driven by substantial pricing actions of 10.1% that offset a -1.1% decline in real internal growth. This pricing strategy reflects Nestle’s response to the ongoing inflation in cocoa prices affecting the confectionery industry.

The detailed product category performance is illustrated in the following table:

Geographically, emerging markets outperformed developed markets with organic growth of 4.5% compared to 1.6%, despite showing negative real internal growth of -0.3%. The stronger performance in emerging markets was primarily driven by pricing actions of 4.8%, reflecting different market dynamics and inflation rates across regions.

The geographic distribution of growth is visualized in this global overview:

Among Nestle’s globally managed businesses, Nespresso demonstrated robust performance with 5.7% organic growth, composed of 2.6% real internal growth and 3.2% pricing. Nestle Health Science also performed well with 4.2% organic growth, driven primarily by volume increases rather than pricing.

Strategic Initiatives

Nestle outlined its four-pillar strategy to accelerate growth, focusing on expanding winners, scaling big bets, addressing underperformers, and building new growth platforms. The company identified 18 key underperforming business cells requiring targeted actions, including US creamers, US frozen foods, and soluble coffee in Europe.

The strategic framework is illustrated in this comprehensive overview:

CEO Laurent Freixe emphasized the company’s progress on its "Fuel for Growth" cost savings program, which aims to support growth investments while maintaining profitability. Nestle also highlighted its continued organizational simplification efforts to enhance execution capabilities and market responsiveness.

Forward-Looking Statements

Nestle maintained its 2025 guidance, expecting organic sales growth to improve compared to 2024 and strengthen throughout the year as the company continues to execute its growth plans. The underlying trading operating profit (UTOP) margin is expected to be at or above 16.0% as the company balances investments for growth with cost efficiency initiatives.

The company acknowledged the dynamic global situation with heightened risks and uncertainties but expressed confidence in its ability to navigate these challenges through its strategic initiatives and operational flexibility. Nestle’s management indicated that their guidance incorporates their assessment of current tariffs’ direct impact and the company’s ability to adapt to changing market conditions.

Nestle’s historical performance over the past eight quarters shows a stabilization of growth rates after the volatility seen in 2023 and early 2024:

As Nestle continues to execute its growth strategy in 2025, investors will be watching closely to see if the company can deliver on its promise of accelerating organic growth while maintaining profitability in a challenging global economic environment.

Full presentation:

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