Nestlé’s Waters Unit Valued at €5 Billion as CEO Pushes Through Radical Overhaul

Nestlé posts stronger-than-expected Q1 sales of 3.5%, driven by volume recovery, as CEO Navratil pushes waters sale, job cuts, and core focus by 2027.

The Swiss food giant has emerged from its largest-ever product recall with stronger-than-expected first-quarter numbers, giving chief executive Philipp Navratil the breathing room to accelerate a sweeping portfolio restructuring. Nestlé reported organic sales growth of 3.5 percent for the period, beating analyst estimates, as coffee and snacks drove a genuine volume recovery that the market had not anticipated.

The real internal growth — a measure stripping out price increases — came in at 1.2 percent, signaling that consumers are buying more Nestlé products rather than simply paying more for them. This marks a notable shift after years of sluggish volumes. The headline figure, however, was dragged down by a nearly six percent currency headwind from the strong Swiss franc, leaving reported revenue at roughly 21.3 billion francs. Even so, that figure topped consensus expectations.

January’s global recall of infant formula, triggered by contamination from a supplier, cost the company around 90 basis points of organic growth. Nestlé confirmed the products are back on shelves and expects a full recovery in the segment by year-end.

Waters division enters the spotlight

The real drama is unfolding behind the scenes. Nestlé confirmed it has started formal talks with potential partners for its waters business, which houses premium brands such as Perrier and S.Pellegrino. The company aims to remove the unit from its balance sheet by 2027. According to media reports, Deutsche Bank is advising on the sale of a 50 percent stake, with the entire package valued at roughly €5 billion.

Private equity heavyweights are circling the asset. Industry sources name CD&R, KKR, PAI Partners and Platinum Equity as contenders expected to advance to the next bidding round.

The waters disposal is just one piece of a broader divestment push. Nestlé is also putting its mainstream vitamins and supplements business on the block, including brands like Nature’s Bounty, Osteo Bi-Flex and Puritan’s Pride. The US private-label operations in that segment are similarly up for review.

Job cuts and margin targets

The strategic pivot comes with a heavy human cost. Nestlé is eliminating more than 16,000 positions worldwide as part of a cost-cutting drive targeting three billion Swiss francs in savings by the end of 2027. The company is narrowing its focus to four core pillars: coffee, pet care, medical nutrition, and food and snacks.

Investors have given the tough medicine a cautious thumbs-up. The stock jumped nearly six percent in SIX trading on the back of the quarterly report, breaking above its 100-day moving average. Shares were changing hands at around 80 francs on Monday, though they remain below their 50-day average and are nursing a modest year-to-date decline.

Outlook unchanged

Despite geopolitical uncertainties and volatile raw material costs, management is sticking to its full-year guidance. Nestlé expects organic growth of between three and four percent for 2026, with operating margins set to improve markedly in the second half. The company is targeting free cash flow of more than nine billion francs for the year.

Analysts at Bank Vontobel described the quarterly figures as early evidence of a sustainable revival in the core business, even as the currency drag continues to distort the reported numbers. For Navratil, the task now is to prove that the operational momentum can be maintained while the company executes what is shaping up to be its most radical portfolio surgery in decades.