Nestle organic sales growth reaches 4.0%, beats forecasts as Russian business deconsolidated

Key Facts

Nestle reported organic sales growth of 4.0% in the third quarter of 2026, beating analysts' average forecast of 3.4%, according to the group's results and the consensus it compiled before the announcement. Reported sales for the period totalled 22.8 billion Swiss francs, according to its nine-month sales statement, alongside the announcement that its Russian business would be deconsolidated from the group's accounts. Nestle said in its prepared investor remarks that real internal growth reached 2.8% in the third quarter, while pricing contributed 1.1%. The chief financial officer said most of the real internal growth came from increased sales volumes, saying "most of it comes from volumes rather than product mix". Organic sales growth reached 3.7% over the first nine months of the year, according to the company's statement, compared with a faster pace in the third quarter alone. The performance came as the group maintained its full-year outlook despite the accounting implications of losing management control of its Russian operations.

Despite beating analysts' forecasts, third-quarter organic growth was below the 4.3% recorded in the same period of 2025, according to Nestle's comparison note for investors. Real internal growth was 1.5% in the third quarter of the previous year, compared with the higher level recorded in the current period. Pricing, meanwhile, contributed 2.8% in the third quarter of 2025, before declining in this year's third-quarter results. The contributions of volumes and pricing to growth thus shifted between the periods, with real internal growth rising and the contribution from prices falling, according to the group's figures. In coverage ahead of the results announcement, Investing reported that JPMorgan had upgraded Nestle shares from "neutral" to "overweight". The bank also raised its share price target to 100 Swiss francs from 90 francs, according to the same coverage, revising its assessment before the release of the latest sales figures.

In Russia, Nestle said it stopped consolidating its business from the end of September 2026 after losing management control following its placement under temporary external administration. The company had said in an earlier statement that a Russian presidential decree had placed its local operations under that administration, and said at the time that it was assessing the situation and its options. The group confirmed in its sales statement that it remained the legal owner of the Russian assets, despite the loss of management control that underpinned the accounting decision. In its confirmation of the assets' status, it said "the group remains the legal owner of the assets", as the business began to be removed from the scope of financial consolidation at the end of the month. In its update on Russia and Ukraine, Nestle also stressed that "any statements made on behalf of Nestle's Russian entities reflect the position of the temporary external administration". The Russian business had already been excluded from the calculation of organic growth since 2022, according to the investor presentation, preceding the decision to deconsolidate it from the current accounts.

The financial consequences of the decision are reflected in assets and net debt, with Nestle derecognising Russian net assets of about 1.6 billion Swiss francs, according to the sales statement. The group also recorded a non-cash charge of about 1.4 billion Swiss francs relating to cumulative currency translation adjustments associated with the deconsolidation. The company said the charge did not affect total equity, despite being recognised as part of the accounting treatment of the Russian business. On debt, the deconsolidation increases the group's net debt by about 0.9 billion Swiss francs at the end of 2026, according to its estimate in the statement. The Russian operations contributed about 2% of group sales on an annual basis before being removed from the scope of consolidation. Their annual contribution to both underlying trading operating profit and free cash flow was about 3–4%, according to Nestle, exceeding their relative share of sales.

Looking ahead, the chief financial officer warned in the prepared investor remarks of renewed upward pressure on input costs, a factor the company is monitoring in its future pricing decisions. She said: "Looking ahead, there is now again some upward pressure on input costs", as the group maintained its annual performance guidance. Nestle confirmed in its investor presentation that it expected organic growth of between 3% and 4% in 2026. It also expects its underlying trading operating profit margin in the second half to be broadly in line with the first half, according to the same guidance. On liquidity, the group maintained its forecast for full-year free cash flow of more than 9 billion Swiss francs. Nestle's investor calendar set 18 February 2027 as the date for the announcement of its full-year 2026 results.