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Another day, another top-management change.
Nestlé’s newsflow has been busy lately—though not always in its favour. In September 2024, CEO Mark Schneider was replaced by veteran Laurent Freixe after years of disappointing results. In early September 2025, Freixe was in turn replaced by Philipp Navratil, following revelations of an undisclosed romantic relationship with a direct subordinate. On 16 September 2025, Chairman Paul Bulcke announced he will step down on 1 October 2025 and not at the 2026 Annual General Meeting. Pablo Isla, former CEO and Chairman of Inditex and a Nestlé board member since 2018, will become the new Chairman as of 1 October.
That is a lot of turnover for a group like Nestlé, which has recently embarked on a restructuring with a renewed focus on its core businesses. We don’t expect a shift in strategic direction, though restructuring efforts may accelerate while the new top managers—Chairman Pablo Isla and CEO Philipp Navratil—will need to step-in quickly to restore confidence. The next major milestone for Nestlé is the release of Q3 2025 sales on 15 October 2025, followed by full-year earnings on 19 February 2026.
The share price has come under further pressure as, beyond management changes, investors are scrutinising the sustainability of the dividend. Financial leverage is elevated, with net debt/EBIT at 3.55x at the end of 2024 compared to 1.65x in 2019, largely due to acquisitions made under Mark Schneider. Free cash flow generation was unusually low in H1 2025 at CHF 2.3bn versus CHF 4.0bn a year earlier mostly due to an increase in working capital. This has intensified concerns about the dividend, which Nestlé has never cut since the introduction of the registered share. Consensus forecasts call for free cash flow—after interest and taxes, before M&A—of CHF 8.7bn in 2025, implying a sharp rebound in H2, as Nestlé would need to generate around CHF 8.0bn to fully cover its annual dividend. This leaves limited room for manoeuvre, but Nestlé’s stake in L’Oréal, worth about CHF 39bn, provides a significant buffer. The company could also monetise non-core businesses, such as water or vitamins.
Valuation remains supportive. The stock trades at 16.0x P/E, below its 15-year median of 20x and at a 7% discount to the Swiss equity market, with a dividend yield of 4.3%.
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