In a nutshell: This is what happened
- Nestlé is growing more strongly again: despite gloomy consumer sentiment, the Swiss food group was able to increase currency-adjusted sales by more than 4% in the third quarter
- Management problems: CEO Laurent Freixe was dismissed in September 2025, just one year after taking office. Reason: according to media reports, he had an undisclosed "romantic relationship" with an employee who reported directly to him
- New management provides fresh impetus: Philipp Navratil took over as the new CEO in September 2025. Shortly afterwards, he announced an updated strategy. Among other things, this includes the reduction of 16,000 jobs
We assess the operating performance and strategic news, report on the latest management call and update our valuation assessment. Here we go!
Investment thesis
The Nestlé share convinces with defensive characteristics:
- Reliable business development
- Low price volatility (beta approx. 0.5)
- More than 60 years without a dividend cut
Nevertheless, there are some growth and value drivers:
- Sales growth (volume growth in emerging markets, positioning in attractive categories, market share gains, price increases)
- Margin increase potential
- High cash flow that goes directly to shareholders via dividends and share buybacks
CEO Philipp Navratil wants to further accelerate sales growth and at the same time cut costs by making Nestlé more efficient.
If this succeeds, there is considerable share price potential.
Since the beginning of 2024, Nestlé has succeeded in achieving increasingly stronger currency-adjusted sales growth.
While the growth rate in 2024 was just over 2%, sales rose by 3% in the first nine months of 2025 and by more than 4% in the third quarter of 2025.
Particularly pleasing: Nestlé has succeeded in increasing sales prices and sales volumes at the same time.
Excluding the China business, which is currently in crisis, the growth rate would have been even higher.
As Nestlé reports in Swiss francs, the permanent appreciation of the hard currency has a negative impact on the growth rates reported in CHF.
Profit development
Earnings (reported only half-yearly) showed a slight decline in the first half of 2025
The EBIT margin reached 16.1%, compared to 16.7% in the previous year.
Operating profit fell to CHF 7.1 billion, compared to CHF 7.8 billion in the previous year (-8.3% compared to the prior-year period).
In addition to negative exchange rate effects, higher marketing and restructuring costs as part of the Fuel for Growthprogram had a negative impact.
Despite these burdens, planned savings were realized faster than expected in the first half of the year.
This provides scope to maintain investments in a higher growth rate.
The management's medium-term targets remain unchanged:
- >4 % organic sales growth
- >17% EBIT margin
Special features
Business in China is currently particularly challenging for the Swiss food giant. Despite ongoing price reductions (four quarters in a row), sales are shrinking because there is insufficient volume growth.
On the other hand, the "Europe" region stands out positively with organic growth of 4.3 %.
In terms of products, Nespresso surprises with a growth rate of 6.7 %.
The coffee division is growing, particularly in the USA, due to the introduction of cold drinks (latte, latte macchiato or cappuccino as a cold drink in supermarkets).
A brief look at the balance sheet
From a financial perspective, Nestlé continues to aim to reduce net debt to less than 2.5 times EBITDA.
The gearing ratio has already fallen slightly in the reporting period, but was still over 3x at the middle of the year.
Free cash flow reached CHF 10.1 billion (CHF 8 billion from operations + CHF 2.1 billion from investments) and is largely in line with our expectations.
Strategic news
What has changed with the new CEO?
In addition to the operating performance, the renewed, abrupt and surprising change of CEO had an impact on Nestlé's share price performance.
The background to this are reports of a Affäre des alten CEOs with an employee who reported directly to him.
While Laurent Freixe was the expected successor as Nestlé Vice Chairman and long-standing CEO of the regions with the highest sales (America and Latin America), the appointment of Philipp Navratil came as a surprise to me.
He had no comparable Group responsibility until the beginning of 2025, but made a name for himself with the successful transformation of the Nescafé division in Mexico (2013-2020).
In this respect, the Board of Directors' decision suggests a deliberate change of course: Away from the traditional corporate logic, towards a more transformation-driven management style.
Philipp Navratil is a Swiss citizen, but has a very international outlook both professionally and privately. This is fitting for a company that generates around 99% of its sales outside Switzerland.
He has been with Nestlé for over 25 years. This is typical of the company, which traditionally recruits from within its own ranks.
Navratil's career did not start with a brand, but in corporate audit, an area that combines sober analysis with internal control.
His best-known station to date was Mexico. There he was responsible for Nescafé, a core brand that was losing market share at the time.
The turnaround was achieved under his leadership. Nescafé grew again in Mexico, gained market share and significantly improved profitability. This could be seen as a blueprint for the "turnaround" at Nestlé.
Navratil himself emphasizes that he has no dogmas. What counts is the result and he is prepared to question structures to achieve this.
Transparency and personal responsibility (accountability) are particularly important to him. Both suggest a management style that relies less on hierarchy and instead allows more speed
n the most recent management call, the CEO was asked what will change under his leadership.
He then named three priorities:
1. volume growth
This key figure is his top priority. He will no longer accept a decline in market share.
To achieve this goal, uniform performance indicators have been introduced for the first time in Nestlé's history.
Navratil is also prepared to invest significantly more money: In improved product quality, optimized flavours, more valuable packaging and marketing activities.
2. sustainable portfolio
When asked about a possible portfolio restructuring, he named four criteria:
Is it a growing category?
Can attractive margins be achieved?
Is Nestlé positioned to win?
Is the company actually gaining market share?
3. efficiency-enhancing measures
In order to finance the increased investment, Nestlé will cut 16,000 jobs over the next two years.
CEO Navratil commented on the decision as follows: "In the past, Nestlé has not exactly been the most efficient company."
If the plan works, the growth rate will pick up without having to cope with a decline in margins. This would result in a revaluation.
Personal assessment
With Navratil comes a new culture: a culture that revolves more around performance.
And performance is clearly defined for him: It's about gaining market share. Products that are not leaders or are stuck in stagnating categories are not a priority.
The decisive factors are competitiveness and speed. For Navratil, it is better to be fast than perfect.
He currently classifies only 10% of the portfolio as "high performers", i.e. products that are leading in growing categories and gaining market share. This proportion is to be increased.
At the same time, two areas are up for grabs (as under his predecessor): the water business (approx. CHF 2.5 billion in sales) and the mainstream brands in vitamins and minerals (approx. CHF 5 billion in sales). Both are considered underperformers.
The announcement to cut 16,000 jobs was a strong signal. It is unusual for Nestlé to publicly announce such figures. But it fits in with the new culture: less diplomacy, more plain language.
My conclusion: the new management is showing the right mentality. Nestlé has all the resources it needs to grow profitably.
The greatest danger is not competition, but our own inertia.
A culture of performance counteracts this complacency. And this is exactly what Philipp Navratil wants to strengthen again
SAP integrations
In addition to the operating figures and the heckling about leadership, Nestlé has implemented the world's largest SAP upgrade in the last two years, migrating all systems to SAP S/4HANA.
This means that Nestlé has switched from several old SAP on-premise solutions (i.e. SAP on its own servers) to the latest cloud version of SAP.
Preparations for this major project began back in 2020. Nestlé is one of the three largest SAP customers in the world alongside Apple and BMW.
The new SAP landscape runs entirely in Microsoft's Azure cloud and is compatible with Microsoft's Copilot AI, not with SAP's own AI solution.
The project was supported by HPE and Intel, among others. The aim was to limit system downtime to less than ten hours, which the company says it achieved.
The project is considered a success throughout the Group. Particularly relevant from an investor's perspective: Major IT projects of this kind usually tie up considerable resources and management attention.
The new CEO is now benefiting from the fact that this foundation has been laid. The platform is modern and scalable.
A temporary advantage that provides the company with operational relief during the implementation phase of the new strategy
Valuation of the Nestlé share
Assumptions for the future development of the company
The medium and long-term prospects have not changed as a result of the change of CEO.
Management is aiming for organic sales growth of more than 4 % p.a. in the medium term (2 % volume growth, 2 % price adjustments) and would like to increase the operating profit margin to more than 17 %.
In contrast, we continue to expect 5% organic growth with a slightly lower margin of 16%. You can read the background in our ausführlichen Unternehmensanalyse zur Nestlé Aktie read more.
The somewhat more optimistic growth assumption is based on the favorable growth rates of the individual segments and is underlined by the new management's statement that Nestlé must regain market share in all categories.
It is also realistic to assume that the water segment and the non-medical vitamins, minerals and supplements (VMS) division will be sold.
The new CEO's predecessor has already questioned these investments and the new CEO has also put the "underperformers" up for sale.
Consequently, we are adjusting our assumptions for the future only slightly (updating the period under review from 2025 to 2026):
- Sales CHF 92 billion (unchanged)
- EBIT margin 16.0 % (unchanged)
- EBIT CHF 14.7 billion (unchanged)
- Net interest income CHF -1.5 billion (unchanged)
- EBT CHF 13.2 billion (unchanged)
- Tax rate 18 %
- Income from participations CHF 1.0 billion (unchanged)
- Net profit CHF 11.8 billion (unchanged)
- Earnings per share CHF 4.60 (unchanged)
- Dividend per share CHF 3.15 (previously: CHF 3.00)
- Free cash flow CHF 10.3 billion (unchanged)
- FCF per share: CHF 4.00 (unchanged)
Valuation based on the P/E ratio
Finally, we validate our assessment of the valuation of the Nestlé share on the basis of the historical price/earnings ratio
Image source: Aktienfinder.net
Over the last 20 and 10 years, Nestlé shares have been valued at an average P/E ratio of 20 and 22 respectively.
Currently (2025e/2026e), however, the stock costs only 17 to 18 times earnings, which corresponds to a valuation discount of 10-20%.
Nestlé shares were previously as cheap as they are now in 2014.
This indicator therefore also points to a slight undervaluation
Conclusion on Nestlé shares: things are getting better - and the new CEO is making a good impression
Operational development
Business performance is improving, even if organic growth of around 3% in the first nine months is still below the long-term target of 4% and our expectations of 5%.
The EBIT margin remained robust at a good 16%, despite higher marketing expenditure and restructuring costs.
The new CEO Philipp Navratil has changed the tone: Speed, efficiency and cost control are coming more to the fore.
It is a small cultural change, or rather a strategic shift: from defensive stabilization with a focus on marketing & price reductions to the goal of performance through volume growth and market share gains
Valuation assessment
While the general stock market has become increasingly expensive in recent years, Nestlé shares are available at a discount of 10-20% to the historical average valuation.
Because many investors are looking for quick and large profits in the current market phase, the No. 1 food company is being somewhat forgotten.
Yet the Swiss company scores with defensive characteristics that investors will be desperately looking for in the next correction phase: Reliable business development, low price fluctuations and high payouts (4% initial dividend yield).
Even though it is a share, Nestlé shares have the character of a stepped coupon bond (with higher dividend payments each year).
In terms of expected returns, the trees will not grow into the sky - but the general market return should be achievable, and with very low risks.
Nestlé therefore remains a quality stock with an attractive risk/reward profile.
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