Nestlé's FY2025 profit drops 17%, infant formula recall squeezes profit margin

Investing.com - Nestlé SA announced on Thursday that its net profit for 2025 declined by 17%, with a significant narrowing of profit margins. The world’s largest food company faced multiple pressures from restructuring costs, asset impairments, and the recall of infant formula in December.

Net profit attributable to shareholders decreased from CHF 9.088 billion to CHF 9.03 billion, while operating profit from trading fell from CHF 14.63 billion to CHF 12.68 billion.

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Operating profit margin narrowed from 16% to 14.2%. Sales declined from CHF 91.35 billion to CHF 89.49 billion. Basic earnings per share dropped from CHF 4.19 to CHF 3.51.

Other operating expenses increased from CHF 1.2 billion to CHF 1.85 billion, mainly due to impairments of real estate, plant, equipment, and intangible assets rising from CHF 548 million in 2024 to CHF 923 million, as well as provisions for litigation and loss contracts increasing from CHF 193 million to CHF 363 million.

The company stated in footnotes that miscellaneous transaction expenses include inventory write-down provisions related to the infant formula recall launched in December 2025 and expanded in January 2026.

Goodwill and intangible assets decreased from CHF 49.87 billion to CHF 44.32 billion, a reduction of CHF 5.55 billion in one year.

Goodwill and intangible assets in the Nutrition & Health Sciences division amounted to CHF 21.73 billion, while sales in this division were only CHF 6.55 billion, with an impairment of CHF 476 million recorded.

Operating profit for this division fell from CHF 794 million to CHF 709 million, with a profit margin of 10.8%.

The largest region by sales was the Americas, with revenue of CHF 34.48 billion, down from CHF 36.14 billion last year. Operating profit in this region decreased from CHF 7.74 billion to CHF 6.47 billion.

Sales in Asia, Oceania, and Africa totaled CHF 20.55 billion, down from CHF 21.18 billion last year; Europe generated CHF 17.58 billion in sales, up from CHF 17.08 billion, making it the only region to see sales growth.

Nespresso’s operating profit increased from CHF 1.08 billion to CHF 1.14 billion, with sales remaining flat at CHF 6.48 billion. Nestlé Waters and premium beverages’ operating profit was CHF 199 million, below CHF 286 million last year.

Operating cash flow was CHF 15.9 billion, down from CHF 16.68 billion. Capital expenditures decreased from CHF 5.64 billion to CHF 4.53 billion. Net debt remains high, with non-current financial debt at CHF 46.25 billion, down from CHF 51.7 billion last year.

Currency revaluation reduced shareholders’ equity by CHF 3.2 billion, leading to total shareholders’ equity decreasing from CHF 36.69 billion to CHF 33.06 billion.

In 2025, Nestlé paid CHF 7.85 billion in dividends to shareholders, compared to CHF 7.82 billion in 2024.

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