Nestlé has entered advanced negotiations to sell its ice cream division as the company grapples with declining profits attributed to recent baby formula recalls. The Swiss multinational confirmed discussions with Froneri, an ice cream joint venture backed by private equity firm PAI Partners, which is known for brands such as Häagen-Dazs.
The potential divestiture of the ice cream business is part of a broader strategy under newly appointed CEO Philipp Navratil. In addition to the ice cream arm, Nestlé is exploring the sale of its waters and drinks segment, which includes popular products like San Pellegrino and Perrier. This segment is reportedly valued at approximately £4.4 billion and is expected to be deconsolidated from the company’s financial statements by 2027.
The company’s recent financial report reveals that its underlying trading operating profit fell by 8.4%, dropping to 14.4 billion Swiss francs (around £13.8 billion) in 2025. This decline has been largely attributed to rising costs associated with restructuring efforts and significant trading items, including impairments and legal expenses related to the infant formula recall.
In the UK, Nestlé and competitor Danone have initiated a series of product recalls this year. In January, Nestlé began a precautionary recall of several batches of SMA Infant Formula and Follow-On Formula products due to concerns over the potential presence of cereulide, a harmful toxin.
On Thursday, Nestlé announced that the impact of the baby formula recalls would reduce its underlying profits by 75 million Swiss francs (approximately £71.9 million). Additionally, an inventory write-off connected to the recall is estimated at 110 million Swiss francs (about £105.5 million). The company confirmed that the recall process has been completed and is now focused on replenishing stock, having resumed production at its formula factories.
In its latest financial update, Nestlé reported a 2% decline in overall sales for the previous year. This decrease was partly offset by a 3.5% growth in organic sales, driven in part by a 2.8% increase in pricing.
Navratil expressed optimism regarding the company’s performance, stating, “I am encouraged by our performance during 2025, which reflects the targeted actions we have taken in a difficult external environment. 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 changes, its strategic focus appears aimed at stabilizing the company and addressing the pressures exerted by shareholders, setting the stage for a potential turnaround in the coming years.
