Nestlé Momentum interruptus

Research evidence excerpt

Nestlé Momentum interruptus

e by the company since implementing its new strategy in late 2024. Two key areas: 12/26E 4.50 4.58 2 4.42

1) Top-line-wise, Q3 should provide some indications on Nestlé's sustainable RIG level as 12/27E 4.76 4.85 2 4.71

the basis of comparison becomes more challenging - especially in emerging markets, 12/28E 5.02 5.13 2 4.99

and as the Q2 temporary headwinds should subside; Petcare to be of great focus as sell-

in and sell-out levels should, in theory, be better aligned; 2) UTOP margin: we expect Guillaume Delmas

Nestlé's UTOP margin to be (slightly) stronger in H2 (see our reconciliation) including a Analyst

guillaume.delmas@ubs.com

necessary (in our view) step up in marketing behind the group's core business - note that

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in H1, brand support increased by c. CHF150m behind the growth platforms (30% of

sales) but declined by c. CHF100m for the core business; furthermore, following a recent Andrei Condrea

uptick in cocoa and coffee prices, getting more clarity on this year's El Nino impact will Analyst

andrei.condrea@ubs.com

be key to investors' perception of Nestlé's 2027 margin development.

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We raise our 2026 EPS by 2% on FX, financial expenses and margin

We have tweaked our FY26 Organic Growth (OG) forecast to 3.5%, up from 3.3%;

within this, we have +1.6% RIG and +1.9% pricing. FX headwind now -3.3%, vs -4.5%

previously. For UTOP margin, we have 16.5% for FY26 (16.4% previously) implying

16.6% in H2. We have revised down our net financial result forecast owing to the lower

than expected number reported in H1. All in all, our FY26 adj. EPS is increased by 2% to

CHF4.58 (was CHF4.50). Prior to yesterday's print, consensus was for 3.4% OG

(1.5% RIG, 1.9% price), 16.4% UTOP margin and adj EPS of CHF4.47.