Nestlé shares tumble after H1 net profit drops 31%

Nestlé reported a 31.4% decline in net profit to CHF 3.5 billion for the first half of 2026, dragged down by a CHF 1.3 billion noncash write-down on businesses classified as held for sale, restructuring charges, and the lingering effects of a global infant formula recall. Shares fell nearly 7% in Zurich on Thursday, heading for their steepest single-day drop since July 2002, according to Reuters.Nestlé Global+1

Costs Weigh on Margins Despite Growth Momentum

The world's largest food company posted organic sales growth of 3.6% in the first half, with real internal growth accelerating to 1.8% in the second quarter from 1.2% in the first — progress toward its medium-term target of above 2%. Coffee led the way with 7.5% organic growth for the half, driven by Nescafé and Nespresso, while Food & Snacks grew 3.7%.Nestlé Global

But higher coffee and cocoa costs, an infant formula recall that shaved roughly 90 basis points off first-quarter growth, and tariff headwinds eroded profitability. The underlying trading operating profit margin slipped 10 basis points to 16.4%, while gross margins fell 20 basis points to 46.4%. Restructuring costs nearly doubled to CHF 0.8 billion as CEO Philipp Navratil's "Fuel for Growth" efficiency program advances, bringing cumulative savings to CHF 1.7 billion.Nestlé Global

The CHF 1.3 billion write-down relates to businesses now slated for disposal, including mainstream vitamins and supplements, ice cream, and the waters and premium beverages division, which on Thursday was placed into a planned 50:50 joint venture with Platinum Equity valued at EUR 4.9 billion.Nestlé Global

Raised Outlook Fails to Reassure Investors

Management maintained its full-year organic growth guidance of 3% to 4% and said it now expects the second-half margin to be "broadly similar" to the first half — effectively an upgrade from earlier expectations of heavier first-half pressure. Free cash flow surged 46% to CHF 3.4 billion, with full-year guidance set above CHF 9 billion.Nestlé Global

Investors were unconvinced. Currency headwinds of 6.2% turned reported sales negative at minus 2.5%, and the net profit headline overshadowed underlying earnings per share, which fell a more modest 2.4% to CHF 2.22. Nestlé shares were last down 6.8% at CHF 80.27 midday in Zurich, extending a multi-year slide that has erased roughly 40% of the stock's value since early 2022.MEXC+2

"Our RIG-led growth strategy is delivering," Navratil said in the company's earnings release. "While the external environment remains uncertain, we are taking actions to accelerate consistent growth."Nestlé Global