Key Highlights
- Nestlé shares have plummeted approximately 41% from their early 2022 peak, erasing around $177 billion in total market capitalization during a challenging period.
- CEO Philipp Navratil is executing a plan to eliminate 16,000 positions while concentrating operations on coffee, pet care, snacks, and nutritional products — aiming for 3%–4% organic expansion in 2025.
- Q1 2026 real internal growth (RIG) climbed 1.2% compared to the prior year, propelling shares upward by 5.9% — the strongest daily performance since October 2025.
- The company has negotiated with Spanish labor unions to cut planned job reductions by 20%, lowering the total from 301 to no more than 242 roles.
- Shareholder activists are urging Nestlé to divest its ~$47 billion L’Oréal stake for share repurchases, while appetite-suppressing GLP-1 medications and geopolitical tensions pose ongoing challenges.
Nestlé (NESN) shares have declined by roughly 41% since the start of 2022, representing a painful slide that eliminated approximately $177 billion in shareholder value. The global food conglomerate has cycled through three different chief executives in barely over a year, endured failed M&A attempts, and delivered a series of underwhelming sales reports.
Philipp Navratil, who assumed the CEO role in September 2025, now shoulders the responsibility of steering the turnaround. His approach has been decisive and swift.
Navratil unveiled a global workforce reduction plan targeting 16,000 employees — representing roughly 6% of Nestlé’s total headcount — projected to generate cost savings of approximately CHF3 billion ($3.8 billion) through 2027. Implementation of these cuts is already advancing across European operations.
In Spain specifically, Nestlé finalized a negotiated settlement with labor representatives this week to cap job losses at 242 positions, reduced from an initial 301. This represents a 20% decrease. The agreement encompasses severance packages, an employment transition program for displaced workers, and opportunities for internal transfers.
The reductions affect several Spanish facilities, notably the Girona manufacturing site — Nestlé’s primary instant coffee production center in Europe and its third-largest globally.
Volume Metrics Show Positive Momentum
Beyond workforce reductions, Navratil is reshaping Nestlé’s portfolio strategy. The company is divesting underperforming segments including San Pellegrino and select Häagen-Dazs operations, while intensifying investment in coffee, pet nutrition, snack foods, and health-focused products.
His primary performance indicator is RIG — real internal growth — which tracks actual volume expansion rather than price-driven revenue. During Q1 2026, RIG increased 1.2% year-over-year across the majority of business units. Shares rallied 5.9% following that announcement, marking the strongest single-day advance since October 2025.
The stock presently trades at approximately 18 times forward earnings, below its five-year average multiple of 23 times.
Navratil’s first strategic acquisition was revealed earlier this month: a complete takeover of ready-to-drink meal producer yfood Labs, which generated roughly €150 million in revenue during 2025 while maintaining double-digit growth rates.
Material Risks on the Radar
The recovery narrative faces several significant obstacles.
Nestlé maintains an approximately 20% ownership position in L’Oréal, currently valued near $47 billion. Certain shareholders, including Barron’s Roundtable member Christopher Rossbach from J. Stern, are advocating for Nestlé to liquidate this stake and deploy proceeds toward share buybacks. CFO Anna Manz has resisted this pressure, characterizing the investment as “a very high-performing investment.”
GLP-1 weight-management pharmaceuticals represent another threat, as patients using these drugs frequently reduce overall food consumption. Navratil has countered by emphasizing that Nestlé provides nutritional solutions, not merely caloric intake.
Geopolitical instability also looms large. Continuing conflicts surrounding the Strait of Hormuz could elevate commodity input costs, constraining Nestlé’s pricing flexibility — the same issue that eroded market share during 2022 and 2023 when the company implemented price hikes of 8.2% and 7.5%, respectively.
Nestlé is projecting organic revenue growth between 3% and 4% for the current year. Analysts view this target as ambitious. Annual free cash flow is expected to expand to CHF12.9 billion by 2030, compared to CHF9.2 billion currently.
The company has raised its dividend annually since 1996. Last year’s distribution reached CHF3.10 per share, translating to a 3.94% yield.
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