Nestlé is in advanced discussions to divest its remaining ice cream business, as the company grapples with declining profits linked to recent baby formula recalls. The Swiss multinational confirmed that it is negotiating with Froneri, a joint venture with private equity firm PAI Partners, which owns brands like Häagen-Dazs. This strategic move comes amid broader efforts by newly appointed CEO Philipp Navratil to enhance the company’s performance and address shareholder concerns.
In addition to the ice cream negotiations, Nestlé is exploring the potential sale of its waters and drinks division, which includes well-known brands such as San Pellegrino and Perrier. The division is reportedly valued at approximately £4.4 billion and is expected to be deconsolidated from the company’s financial statements by 2027.
The decision to sell parts of its business follows a challenging financial report, where Nestlé indicated a significant dip in underlying trading operating profit, which fell by 8.4% to 14.4 billion Swiss francs (around £13.8 billion) in 2025. The company cited increased costs associated with restructuring and various trading items as contributing factors. Notably, some of these costs are linked to impairments and legal expenses arising from the baby formula recall, which impacted sales returns.
Earlier this year, Nestlé, along with competitor Danone, announced multiple product recalls in the UK. In January, the company initiated a precautionary recall of certain batches of SMA Infant Formula and Follow-On Formula products due to potential contamination with cereulide. On Thursday, Nestlé disclosed that its 2025 financial figures would reflect a 75 million Swiss franc (approximately £71.9 million) hit to underlying profits from these recalls. Additionally, the formula recall led to an inventory write-off amounting to 110 million Swiss francs (around £105.5 million).
Nestlé has stated that the recall process has now been completed and that the company is focused on replenishing its stock, having resumed production at its formula factories. The latest update from the company indicated a 2% decline in reported sales last year, as increased sales were offset by adverse currency exchange rates. Organic sales growth was reported at 3.5%, driven in part by a 2.8% increase in pricing.
In addressing the financial challenges, Navratil expressed optimism about the company’s performance in 2025, attributing it to targeted actions taken in a challenging environment. He stated, “We are accelerating our strategy. We are focusing our portfolio on four businesses, led by our strongest brands, with prioritised resources and a simplified organisation.”
As Nestlé navigates these significant transitions, its focus remains on streamlining operations and enhancing profitability in a competitive market.
