(April 23): Nestlé SA showed resilient sales growth in the first quarter, helping the Swiss foodmaker contain the fallout from the largest product recall in its history.
The maker of Nescafe and KitKat candy bars said organic sales climbed 3.5%, led by strength in coffee and snacks. That topped analysts’ estimates and softened the blow from a recall of infant formula brands in more than 60 countries.
“Coffee was the star,” with improving volumes, chief executive officer Philipp Navratil told reporters on a call.
onNestlé shares rose as much as 6% in early Swiss trading, the biggest intraday gain since October. The advance erased the losses for this year.
“This is the kind of reassurance investors were waiting for,” Vontobel analyst Jean-Philippe Bertschy said in a note.
Navratil, just seven months into his tenure, is under pressure to steady the company after the sudden ouster of his predecessor and the formula crisis. He’s previously said he’s aiming for a turnaround built around cost cuts and the disposal of underperforming businesses.
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The company is selling its Blue Bottle Coffee chain to Centurium Capital Partners, it said on Thursday, confirming a Bloomberg report. Nestlé also kicked off talks with possible partners for its water and beverages division, as well as buyers for its struggling vitamin business.
Real internal growth, a key metric of volumes that Navratil aims to increase in 2026, was 1.2% in the first quarter, while pricing grew 2.3% in the quarter. Nestlé confirmed its financial guidance for the year.
The cost of customer refunds and shortages related to the recall amounted to 200 million Swiss francs (US$218 million) in the first quarter. Half the hit was due to diminished customer demand, Nestlé said, adding that it expects a full recovery by year end.
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The company acted quickly and now product availability is back to normal, Navratil said on a call with reporters.
This is the first update since the 160-year-old group reorganised around four core divisions — coffee, pet care, nutrition and food & snacks. The aim of the restructuring is to allow the company to focus on the biggest brands and give local teams more responsibility for less strategic, less global products. The company is in the midst of cutting 16,000 jobs.
As for the conflict in the Middle East, Navratil said that while oil prices have been volatile, “we have so far seen very little impact in our business globally.”
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