LONDON, UK: Nestle's turnaround showed further signs of progress in the third quarter as stronger volumes helped the Swiss packaged food maker beat sales-growth expectations, while the company maintained its full-year outlook.

Organic sales rose four percent in the quarter, above analyst expectations of 3.4 percent, while real internal growth, a measure of sales volumes, rose 2.8 percent, above expectations of 1.5 percent.

It was the first quarter since 2024 in which Nestle's organic sales growth was driven more by volume than price. Price-related growth came in at 1.1 percent, below the 1.9 percent forecast.

Nestle shares rose about 1.5 percent to a three-month high after the results. The stock has gained more than seven percent this year.

CEO Philipp Navratil, who took over in September 2025, has made volume growth central to his strategy as Nestle contends with subdued consumer spending and U.S. tariffs. His plans include reducing the company's exposure to ice cream, water and vitamin brands.

"I am pleased with our progress," Navratil said. "But I am not satisfied. There is much more for us to do to deliver the potential of the business."

Nestle maintained its full-year 2026 forecast for organic sales growth of 3 percent to 4 percent.

Vontobel analysts said the volume-driven growth was "reassuring and provides further evidence of delivery on Nestle's growth priorities".

"The recovery is gaining credibility, though consistency remains the real test," they wrote.

Barclays analyst Warren Ackerman said "pricing remains the key debate" heading into 2027 as consumers face pressure at the same time as input costs rise.

CFO Anna Manz said price increases this year had been incremental compared with significant increases in 2025.

"We'll take pricing to the extent we can without damaging medium-term consumer penetration," Manz said. "As we look forward to 2027, it is an inflationary environment; it's likely we'll see more pricing."

Nestle also excluded its Russian business from its consolidated financial accounts after Moscow seized the operation last month as part of a crackdown on European companies over Europe's support for Ukraine.

The Russian operation contributed around two percent of group sales and was no longer being consolidated from the end of September. Manz said the move would not affect organic sales, volumes, or pricing.

However, the seizure will affect reported sales, underlying trading operating profit and free cash flow from the fourth quarter. Derecognizing the net assets is expected to reduce 2026 net debt by about 900 million Swiss francs (US$1.1 billion).

Nestle is removing Russian assets worth 1.6 billion francs from its balance sheet and recording a non-cash charge of around 1.4 billion francs for cumulative currency translation adjustments.