Nestlé (NESN) Q1 2025 TU earnings summary

Executive summary

• Achieved 2.8% organic sales growth in Q1 2025, with broad-based performance across markets and categories, supported by pricing actions to offset input cost inflation in coffee and cocoa.

• Strategic initiatives, including the 'Fuel for Growth' cost savings program, organizational simplification, and targeted actions in underperforming segments, are progressing as planned.

• Continued investment in core brands, innovation, and digital tools, with market share gains for key brands and positive consumer response to new products.

• Progress on cost savings, targeting CHF 700 million in incremental savings for 2025, mainly from procurement.

Financial highlights

• Q1 2025 reported sales reached CHF 22.6 billion, up 2.3% year-over-year, with organic growth of 2.8%, RIG of 0.7%, and pricing of 2.1%.

• Developed markets delivered 1.6% organic growth, emerging markets 4.5%; e-commerce sales grew 15.1% organically, now 20.1% of total sales.

• Pricing actions in coffee and cocoa addressed input cost inflation, with limited customer disruption.

• Nespresso and Starbucks by Nespresso delivered strong growth, with Nespresso organic growth at 5.7%.

Outlook and guidance

• 2025 guidance remains unchanged, with organic sales growth expected to improve versus 2024 and UTOP margin at or above 16% as investments for growth continue.

• Most pricing for commodity cost increases has been implemented, with further benefits expected in subsequent quarters.

• PFME (marketing investment) targeted to reach a 9% run rate by end of 2025, up from 8.5% in 2024.

• Management notes a dynamic environment with heightened risks and uncertainty, including indirect tariff impacts.