Half-year results 2026: execution driving RIG

About this update from Nestle S.a.

[Ad hoc announcement pursuant to Art. 53 LR] This press release is also available in Français (pdf) and Deutsch (pdf) Follow today's event live 09:30 CEST Investor & analyst call - video webcast Full details on our website Reports published today Half-Year Report (pdf) Other language versions available in Publications ............. Half-year results 2026: execution driving RIG Philipp Navratil, Nestlé CEO commented: "Our RIG-led growth strategy is delivering, with organic growth of 3.7% and RIG of 1.8% in Q2, making steady progress towards our medium-term guidance. Emerging markets growth accelerated, and we delivered solid performance in developed markets. We are increasing and prioritizing our investment behind our leading brands and growth platforms, sharpening our portfolio focus and driving further efficiencies to reinvest. While the external environment remains uncertain, we are taking actions to accelerate consistent growth." Results performance summary 1 Profit for the year attributable to shareholders of the parent Financial highlights Broad-based organic growth (OG) with improving RIG Sequential profit progression while increasing investment Operational and strategic updates Continued acceleration of RIG towards 2%+ medium-term target Portfolio actions sharpening our focus on four core businesses Transformation and cost savings programs on track 2026 guidance Note: 2025 figures were restated as of January 1, 2026, following the integration of the Nestlé Health Science Globally Managed Business into the Nutrition business of the three Zones and the decision to focus Nestlé's portfolio on four categories. Follow today's event live 09:30 CEST Investor & analyst call - video webcast Full details in Events PDF press releases: Reports published today: Contacts: Media: Christoph Meier  Tel.: +41 21 924 2200 [email protected] Investors: David Hancock  Tel.: +41 21 924 3509 [email protected]   Financial reivew Sales Total reported sales in H1-26 were CHF 43.1 billion. Organic growth was 3.6%. Pricing was 2.1%, reflecting roll-over pricing from 2025 supported by incremental pricing actions this year. RIG was 1.5% in the first half, improving from 1.2% in Q1 to 1.8% in Q2. RIG was positive across all of our categories in Q2 and performance in emerging markets was particularly strong. Foreign exchange movements had a negative impact of 6.2%. By product category, H1 growth was broad based, led by Coffee and Food & Snacks. Coffee OG was 7.5%, driven by Nescafé . In Petcare, OG was 2.7%, driven by continued strength in cat and an improvement in dog in Q2. Nutrition OG was -1.2%, with strong performance in adult and medical nutrition offset by infant nutrition. The infant formula recall had an impact on group OG of approximately 90 bps in Q1 and 30 bps in Q2. We expect to regain share by the end of the year. Food & Snacks OG was 3.7%, supported by strong performance in global brands such as Maggi, KitKat and Milo. By geography, OG in developed markets was 2.3%, with RIG of 0.6% and pricing of 1.7%. In emerging markets, OG was 5.6%, with RIG of 2.8% and pricing of 2.8%. Greater China is now stable, a year after we took action to reduce trade inventory and redefine our operating model. By channel, OG in retail sales was 3.6% and in out-of-home channels was 4.1%. Within retail, e-commerce had OG of 12.2% and reached 21.8% of total Group sales. Gross profit and operating profit Gross profit was CHF 20.0 billion. The gross profit margin decreased by 20 bps to 46.4% due to higher coffee and cocoa prices flowing through the P&L, the impact of the infant formula recall and headwinds from tariffs, largely offset by cost savings and net pricing. Distribution expenses as a percentage of sales were 8.4% versus the prior year at 8.3%. Marketing and administration expenses as a percentage of sales decreased by 20 bps to 20.2%. Within this, advertising and marketing expenses as a percentage of sales increased by 30 bps to 8.9%, reflecting a larger increase in gross spend partially offset by some efficiencies. Administration expenses as a percentage of sales included a 30 bps benefit related to changes in a pension scheme. Research and development costs as a percentage of sales were stable at 1.8%. Our Fuel for Growth program targets procurement and operational efficiency savings of CHF 3.0 billion by the end of 2027. In the first half of 2026, we delivered CHF 0.6 billion of incremental savings, slightly ahead of our plan. This brings the total program savings to CHF 1.7 billion, and we are on track to deliver our interim target of CHF 2.0 billion cumulative savings in 2026. Underlying trading operating profit (UTOP) was CHF 7.1 billion, a decrease of 2.8%. The UTOP margin was 16.4%, a year-on-year decrease of 10 bps on a reported basis or flat in constant currency. The decrease was primarily driven by higher coffee and cocoa prices flowing through the P&L, the impact of the infant formula recall, increased advertising and marketing spend, and headwinds from tariffs and foreign exchange, largely offset by actions to drive cost savings, pricing and RIG leverage. Restructuring and net other trading items was CHF 0.8 billion compared to CHF 0.4 billion in H1-25, mainly due to increased restructuring costs linked to our cost savings program. Trading operating profit decreased by 9.3% to CHF 6.2 billion. The trading operating profit margin was 14.5%, a decrease of 110 bps on a reported basis. Other operating expenses was negatively impacted by a non-cash write-down of CHF 1.3 billion as we classify the businesses we are divesting as 'assets held for sale'. Net financial expenses and income tax Net financial expenses decreased to CHF 688 million from CHF 759 million in H1-25, reflecting a lower level of average net debt. The average cost of net debt was 2.5% compared to 2.5% previously. The Group reported tax rate was 28.7%, compared to 26.4% in the prior year period. The increase was mainly due to limited tax deductibility on the write-down of assets held for sale. The underlying tax rate was 22.3% compared to 22.0% in H1-25. Net profit and earnings per share Net profit decreased by 31.4% to CHF 3.5 billion, driven by increased restructuring costs and the write-down of assets held for sale. Basic earnings per share decreased by 31.4% to CHF 1.35, driven by lower net profit. Underlying net profit was CHF 5.7 billion, a decrease of 2.4% and an increase of 3.4% in constant currency. Underlying earnings per share was CHF 2.22, a decrease of 2.4% and an increase of 3.4% in constant currency. Cash flow Cash generated from operations was CHF 6.3 billion compared to CHF 6.2 billion in the same period last year. Free cash flow increased to CHF 3.4 billion compared to CHF 2.3 billion in H1-25, with the increase primarily due to lower capex and lower working capital outflow, partly offset by foreign exchange headwinds. Net debt Net debt was CHF 56.3 billion as at June 30, 2026, compared to CHF 51.4 billion as at December 31, 2025 and CHF 60.0 billion as at June 30, 2025. The increase versus December largely reflected cash outflows for the dividend payment of CHF 8.0 billion, partly offset by free cash flow generated. Acquisitions and divestures On July 23, 2026, Nestlé and Platinum Equity announced a plan to create Peranel, a 50:50 joint venture for Nestlé's waters and premium beverages business, designed to establish a dedicated player with strengthened focus to drive growth in a dynamic category. The transaction is subject to employee consultation processes and applicable regulatory approvals and is expected to close in H1 2027. It assigns an enterprise value of EUR 4.9 billion (CHF 4.5 billion) to Peranel, implying cash proceeds for Nestlé of approximately EUR 3.0 billion (CHF 2.8 billion) at closing.  In early July, we completed the acquisition of the remaining 51% ownership in yfood Labs GmbH from its founders. Sales for yfood were approximately EUR 150 million in 2025, representing double-digit year-on-year growth. The company is now preparing for its next phase of growth, including the brand's expansion into new markets. During H1-26, we divested Blue Bottle Coffee to Centurium Capital. Guidance For the full year, OG is expected to be in the range of 3% to 4%, with RIG accelerating versus 2025, driven by our focused growth plans. Based on current spot rates, we expect the impact of foreign exchange movements on sales to be approximately -3%. 2026 UTOP margin is expected to improve versus 2025. After a good profit delivery in H1, second half margin is now expected to be broadly similar to the first half. Compared to H1, we expect H2 UTOP margin to benefit from lower coffee and cocoa costs impacting the P&L and further cost savings, offset by some higher transportation and energy costs arising from the Middle East conflict. Free cash flow is expected to be above CHF 9 billion. Operating segments In this section, "growth" refers to organic sales growth, unless otherwise specified. H1-2026 operating performance Q2-2026 sales performance Zone Americas H1-26 operating performance Q2-26 sales performance In Zone Americas, growth was broad based, with positive OG across all markets and all categories. Performance was supported by continued execution focus and targeted investments. Our US business remains resilient despite low consumer confidence weighing on spending for some consumers. In Latin America, robust RIG-led growth highlights the strength of our brands and execution. Q2-26 key growth drivers by product category Zone Asia, Oceania and Africa H1-26 operating performance Q2-26 sales performance In Zone AOA, Q2-26 growth was broad based across all categories and most markets. Strong execution is driving positive momentum in our business, despite the mixed consumer environment in different markets. In Greater China, our business is now stable, the planned trade inventory reduction is complete, and we are making good progress in our transition to a demand-led growth model. Q2-26 key growth drivers by product category Zone Europe H1-26 operating performance Q2-26 sales performance Performance in Zone Europe was solid, underpinned by disciplined execution in a competitive environment. Growth continued to be driven by strength in Coffee and Petcare. RIG was impacted by temporary delistings with certain retailers, mitigated by capturing other growth opportunities. As expected, pricing moderated as we lapped increases taken last year. Q2-26 key growth drivers by product category Nespresso H1-26 operating performance Q2-26 sales performance Nespresso delivered solid OG in the quarter in the context of moderating pricing. We continue to focus on growing our active base with targeted consumer acquisition activities, particularly in North America. In Q2, this trend was partially offset by softer consumption in some markets. Nestlé Waters & Premium Beverages H1-26 operating performance Q2-26 sales performance Growth in Nestlé Waters & Premium Beverages accelerated, led by North America, key international brands and favorable weather in Europe.  Performance by product category H1-2026 operating performance Q2-2026 sales performance Coffee delivered 5.8% OG in Q2, led by pricing of 3.6%, which continues to ease, along with RIG of 2.2%. All Zones contributed broadly evenly to OG. Growth was led by Nescafé, Starbucks and Nespresso , partially offset by softness in Coffee mate . Petcare OG was 2.8% in Q2 with RIG of 2.0%. OG improved in Zone Americas and Zone AOA, and was solid in Zone Europe. Both cat and dog contributed to growth. By brand, growth was led by Pro Plan, ONE and Felix. Nutrition OG recovered to 1.7% in Q2 after declining in Q1. The improvement was driven by reduced drag from the infant formula recall, led by a strong recovery in Zone AOA. Adult nutrition and medical nutrition reported strong results, supported by brands such as Vital Proteins and Pure Encapsulations. Food & Snacks recorded OG of 3.2%, driven by RIG. Growth was broad-based across segments, except for frozen food, with AOA the key driver by Zone. From a brand perspective, growth continued to be driven by our global-leading billionaire brands Maggi, KitKat and Milo.

View stock analysis, news, and events for Nestle S.a.