Nestlé shares surge 8% after Q3 growth beats expectations, announces job cuts

Investing.com -- Nestlé SA (SIX:NESN) shares jumped more than 8% on Thursday after the Switzerland-based food and beverage company reported stronger-than-expected real internal growth (RIG) in the third quarter and outlined plans for significant cost reductions under new chief executive Philipp Navratil.

Nestlé said total sales for the first nine months of 2025 declined 1.9% to CHF 65.9 billion from CHF 67.1 billion a year earlier, primarily due to a 5.4% negative foreign exchange impact. 

Organic growth rose 3.3%, driven by 0.6% real internal growth and 2.8% from pricing. Third-quarter organic growth improved to 4.3%, with real internal growth rising to 1.5%.

The company said it plans to cut about 16,000 jobs globally as part of an expanded “Fuel for Growth” program, including 12,000 white-collar positions and 4,000 manufacturing and supply chain roles. 

Nestlé expects the restructuring to generate annual savings of CHF 1 billion by 2027, with one-time costs estimated at twice that amount.

By region, the Americas reported CHF 25.3 billion in sales with 2.5% organic growth. Asia, Oceania and Africa (AOA) posted CHF 15.3 billion with 2.7% growth, while Europe recorded CHF 12.8 billion with 4.3% growth. 

Greater China reduced group organic growth by 0.8 percentage points in the third quarter.

By segment, Nestlé Health Science delivered 3.8% organic growth, supported by 4.1% real internal growth, driven by Active Nutrition and Medical Nutrition. 

Nespresso recorded 6.7% organic growth, fueled by pricing and double-digit gains in North America. Nestlé Waters & Premium Beverages posted 4.4% growth, led by Maison Perrier and Sanpellegrino. 

Across categories, powdered and liquid beverages grew 7.5%, confectionery rose 8%, milk products and ice cream increased 1.8%, PetCare was up 1.2%, water gained 3.4%, Nutrition and Health Science edged up 0.5%, and prepared dishes and cooking aids slipped 0.4%.

Nestlé reaffirmed its 2025 outlook, expecting organic sales growth to improve from 2024 levels and its underlying trading operating profit margin to reach or exceed 16%. The company plans to deliver more than CHF 8 billion in free cash flow in 2025. 

Navratil said the company will prioritize businesses with the highest potential returns and invest more heavily in innovation.

RBC Capital Markets said the results could confirm that Nestlé is on its RIG rehabilitation journey. Analysts noted a 120-basis-point beat on RIG, the biggest area of concern for the market. 

They flagged the performance of Nespresso, supported by U.S. results, and the outperformance of Nestlé Health Science, driven by strong growth in Active Nutrition and improved Nature’s Bounty dynamics.

The review of mainstream and value brands in vitamins, minerals, and supplements is ongoing. RBC said Zone Americas missed expectations and that the company saw a short-term elasticity effect from further price increases in coffee.

RBC noted that coffee RIG momentum continued to be resilient, while confectionery RIG remained negative during the quarter. 

Analysts said guidance for 2025 was maintained, with organic sales growth expected to improve versus 2024 and underlying trading operating profit margin at or above 16%. The guidance includes the negative impact from tariffs currently in place.

Navratil said the company’s main priority is to strengthen growth through sharper execution and disciplined resource use, adding, “Driving RIG-led growth is our number one priority,” he said. “The world is changing, and Nestlé needs to change faster.”