Nestlé to Shed Ice-Cream Business in Shake-Up

Nestlé said it would offload its remaining ice-cream business and pull back from a raft of brands as part of a broader plan to revive the packaged-food giant’s fortunes.

The maker of KitKat chocolate bars and Nescafé coffee is pursuing a turnaround under new Chief Executive Philipp Navratil after a string of setbacks, weaker-than-expected results and management upheaval in recent years.

On Thursday, Navratil said the Swiss company would reorganize around four categories—coffee, petcare, nutrition and food—in a bid to better adapt to changing consumer tastes and reduce costs.

As part of the overhaul, Nestlé said it planned to sell its remaining ice-cream operations to its Froneri joint venture, in which it keeps a 50% stake. Nestlé set up Froneri with private-equity firm PAI Partners in 2016 to house some of its ice-cream brands, including Häagen-Dazs.

Nestlé also said it had started talks to offload its waters and premium beverages arm, which houses brands including Perrier and San Pellegrino.

Companies across the food-and-drinks industry are reshaping their portfolios to play up their strengths and shed less popular brands as consumer habits shift. Unilever has spun off its ice-cream business, forming Magnum Ice Cream, while Keurig Dr Pepper plans to separate its coffee and beverage units.

Investors had eagerly anticipated the scheduled update from Nestlé on Thursday for clues as to the company’s future direction under Navratil. The former Nespresso boss took the top job at Nestlé in September after former CEO Laurent Freixe was ousted over an undisclosed romantic relationship with a subordinate.

Nestlé had previously signaled that some of its business could be on the block, and launched strategic reviews of its vitamins and water units before Navratil took the helm. The new CEO has said he wouldn’t shy away from looking at new areas to trim, and has already set out plans to slash 16,000 jobs.

However, Navratil stopped short Thursday of taking steps some investors had wanted. Those include a potential sale of Nestle’s roughly 20% stake in cosmetics giant L’Oréal to help repay debt or buy back stock.

For Navratil, the L’Oréal stake isn’t high on his list of priorities. “We are a happy holder,” the CEO said Thursday.

The start of Navratil’s tenure has been marred by a crisis in its infant-formula business after a contaminated ingredient from a supplier prompted recalls.

What began as a precautionary recall due to the presence of cereulide bacteria—a toxin that can cause nausea and vomiting in infants—has ballooned into a full-blown crisis affecting products in more than 60 countries.

Navratil said in a call with reporters that the recall was complete and that the company was running factories around the clock to keep up with supply.

However, Nestlé said it expected the infant-formula recall to weigh on sales growth this year. It forecast organic sales growth of 3% to 4%, including a 0.2 percentage-point hit from the recall.

For the fourth quarter, Nestlé reported organic sales growth of 4%, driven both by higher prices and volumes. This beat analysts’ estimates of 3.4%, according to a consensus compiled by the company.

Overall sales for 2025 came in at 89.49 billion Swiss francs, equivalent to about $115.75 billion, down from 91.35 billion francs the year before. Net profit declined 17% to 9.03 billion francs.

Write to Aimee Look at aimee.look@wsj.com and Margot Patrick at margot.patrick@wsj.com