Nestlé reported organic sales growth of 3.5 per cent in the first quarter, ahead of analyst expectations of 2.5 per cent, as volumes showed signs of recovery despite continued pressure on consumer demand.
Real internal growth (RIG), a key measure of sales volumes, increased by 1.2 per cent over the period, comfortably outperforming forecasts of 0.2 per cent and indicating improving momentum across categories.
Group sales for the three months to March totalled 21.3 billion Swiss francs (£20.1bn), broadly in line with expectations. However, reported sales declined 5.7 per cent year-on-year, reflecting external pressures rather than underlying trading performance.
The decline was largely driven by the strength of the Swiss franc, which created a 9.3 percentage point headwind as overseas revenues were translated back into the company’s reporting currency.
Nestlé also faced disruption from a baby formula recall during the quarter.
The food giant has been working to reinvigorate growth following a period of softer demand in key markets. The group implemented a management reshuffle last year and reduced its workforce by around 6 per cent as part of wider efficiency measures.
"Our first-quarter performance demonstrates that our RIG-led growth strategy is delivering," said Nestle's new chief executive, Philipp Navratil.
The company's shares rose six percent, far outpacing the Swiss market that rose one percent overall.
"Nestle is showing early signs of re‑igniting volume growth," said analysts at Vontobel.
"This is the kind of reassurance investors were waiting for and it corroborates management's relatively upbeat tone following" 2025 annual results, they added.
"In an uncertain and complex environment, I would like to thank all our people for their dedication and our customers and consumers for their trust," Navratil added.
That trust was tested at the start of this year when it emerged that Nestle waited for days for a health-risk analysis before alerting authorities after detecting a toxin in its baby formula.
A scare over the toxin cereulide in an ingredient received from a global supplier eventually forced several manufacturers to recall potentially contaminated products in over 60 countries.
Nestle estimated that the recall and impact on consumer demand led to a 0.9 percentage point drop in organic sales.
It said product availability had returned to normal.
"We are already seeing early signs of improvement and expect to fully recover by the end of the year," the company said in a statement.
Navratil said at a press conference that the company was monitoring developments in the Middle East closely, in particular the swings in energy prices.
However, "we have so far seen very little impact in our business globally," he said.
The company said its factories in the Middle East region, which contribute around three percent to sales, continue to operate.
But it warned that the impact of the war on the cost of raw materials, production and distribution, as well as consumer behaviour, remained uncertain.