Growth exceeds expectations
Real internal growth (RIG) reached 2.8% in the quarter, while pricing contributed 1.1%. Reuters reported that analysts had forecast organic growth of 3.4%, RIG of 1.5% and a pricing contribution of 1.9%. It was the first quarter since 2024 in which volume contributed more than price to Nestlé's organic sales growth, according to Reuters.
For the first nine months of 2026, organic growth stood at 3.7%, comprising RIG of 1.9% and pricing of 1.8%.
Reported third-quarter sales rose 5.2% to CHF 22.8 billion, or CHF 22,756 million, from CHF 21,641 million a year earlier. Currency movements added 1.5% to reported sales growth, while net mergers and acquisitions reduced it by 0.3%.
Nestlé shares gained around 1.5% on October 22 and reached a three-month high, Reuters reported. The stock was up more than 7% for the year.
North America recovers; emerging markets grow faster
North America's RIG turned positive after a negative second quarter, reaching 1.8%. With pricing contributing 0.8%, the region's third-quarter organic growth rebounded to 2.6%.
Nestlé attributed the recovery to several businesses. Coffee improved following earlier Starbucks and Nescafé price increases; Petcare shipments to retailers matched strong sales to consumers; and Food & Snacks benefited from better frozen food and confectionery performance.
Emerging markets posted organic growth of 6.8%, comprising RIG of 4.3% and pricing of 2.5%. In developed markets, organic growth was 2.2%, with RIG of 1.9% and pricing of 0.3%.
Petcare and Food & Snacks lead categories
Across product categories, Petcare recorded the highest organic growth at 5.3%, with RIG of 4.3%. Food & Snacks followed with organic growth of 5.0% and RIG of 5.4%.
Coffee's organic growth was 3.4%, including RIG of 1.3%. Nutrition grew organically by 0.3%, while its RIG declined 1.1%. The infant formula recall continued to weigh on the group, reducing quarterly organic growth by about 20 basis points.
E-commerce organic sales grew 15.3% in the quarter, and the channel accounted for 21.6% of group sales for the year to date. Overall retail organic growth was 3.9%, compared with 4.8% for out-of-home channels.
Full-year outlook unchanged
Nestlé continues to expect organic growth of 3% to 4% for 2026, with RIG accelerating compared with 2025. Its forecast also calls for free cash flow above CHF 9 billion.
The company expects its underlying trading operating profit (UTOP) margin to improve from 2025. Excluding any tariff refunds, the second-half margin is expected to be broadly similar to the first half.
Russia accounting change and supplements sale
Nestlé stopped consolidating its Russian business at the end of September 2026 after a Russian presidential decree placed the operations under temporary external administration. The company retains legal ownership of the assets.
On an annualized basis, the Russian operations contributed about 2% of group sales and 3% to 4% of group UTOP and free cash flow. Removing the business from the consolidated accounts involved derecognizing about CHF 1.6 billion in net assets and recording a non-cash charge of about CHF 1.4 billion for cumulative currency translation adjustments. Nestlé said the change adversely affects year-end 2026 group net debt by about CHF 0.9 billion.
Separately, Nestlé agreed on September 1, 2026, to sell its mainstream vitamins, minerals and supplements business to Yellow Wood Partners for USD 1.0 billion, or CHF 0.8 billion. The business generated 2025 sales of USD 1.2 billion, or CHF 1.0 billion.
The sale includes Nature's Bounty, Osteo Bi-Flex, Ester-C, Gard, Nuun, Puritan's Pride and Sisu, along with the associated U.S. private-label supplements business. Regulatory approvals are still required, and the transaction is expected to close by the first half of 2027.
