Nestlé Accelerates Strategic Overhaul with Key Divestment

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Nestlé's new chief executive, Philipp Navratil, is moving decisively to reshape the Swiss food conglomerate. The company has finalized its complete exit from the Herta charcuterie business, marking a significant step in its broader portfolio transformation aimed at refocusing on healthier and plant-based product categories.

The sale of Nestlé's remaining 40% stake in Herta Foods to its Spanish partner, Casa Tarradellas, concludes a joint venture established in 2019. Financial terms were not disclosed. This divestment underscores a deliberate move away from traditional meat-based products, which have been considered a non-core operation for several years, and aligns with a long-term strategy to prioritize nutrition and wellness.

A Blueprint for Renewed Growth

Following a year of transition and his appointment in September, CEO Navratil is now outlining a clear strategic path. The focus will pivot toward leveraging internal innovation rather than pursuing costly acquisitions. Management identifies substantial growth potential within its coffee and pet care segments.

Key pillars of the updated corporate strategy include:
* Achieving a return to 4% organic growth at the earliest opportunity
* Concentrating on in-house research and development capabilities
* Targeting annual free cash flow generation of 10 billion Swiss francs
* Maintaining its stake in L'Oréal purely as a financial investment

Addressing Balance Sheet Pressures

Portfolio changes are also driven by financial considerations. Nestlé's adjusted net debt stood at 2.9 times EBITDA at the end of 2024, a ratio that prompted S&P Global Ratings to revise its outlook on the company to "negative" in October. To reduce leverage, the group continues to evaluate strategic options for its bottled water operations and its vitamin and dietary supplements division.

The company's approximately 38 billion franc holding in L'Oréal serves as a strategic financial asset but is not currently slated for sale.

The success of this comprehensive restructuring now hinges on the execution of a major efficiency program. Navratil faces the dual challenge of managing a reduction of 16,000 positions over the next two years while simultaneously reversing volume declines, critical steps to restore investor confidence.