Nestle to cut 16,000 jobs

AMSTERDAM: Nestle will cut 16,000 jobs, new CEO Philipp Navratil said on Thursday, as the world’s largest packaged food company seeks to cut costs and win back investor confidence.

The jobs being cut represent 5.8% of Nestle’s around 277,000 employees. Navratil said Nestle had raised its cost savings target to 3 billion Swiss francs ($3.77 billion) from 2.5 billion francs by the end of 2027.

U.S. import tariffs are a headwind for Nestle, despite the bulk of the company’s U.S. sales being manufactured locally, while food producers across the board are grappling with fragile consumer confidence and changing habits as people seek to eat more healthily.

“The world is changing, and Nestle needs to change faster,” Navratil said.

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UNPRECEDENTED MANAGEMENT TURMOIL

Nestle, whose shares leapt by around 8% in early trading, has experienced an unprecedented period of managerial turmoil, with Navratil replacing Laurent Freixe, who was fired in September as chief executive over an undisclosed relationship with a direct report.

Chairman Paul Bulcke then stepped down early to make way for former Inditex chief Pablo Isla two weeks later.
Navratil said the 12,000 white-collar job cuts over the next two years, in addition to a further 4,000 headcount reduction as part of ongoing initiatives in manufacturing and the supply chain, were part of an efficiency push.

‘FUEL TO THE TURNAROUND FIRE’

The Swiss maker of KitKat chocolate bars, Nespresso coffee and Maggi seasoning has been fighting to reverse stalling sales growth and arrest a share price slide as it battles U.S. import tariffs, while costs have risen and debt levels have climbed, increasing pressure from investors.

Nestle’s quarterly results “add fuel to the turnaround fire,” Bernstein analysts wrote in a note, naming the headcount reduction as a “significant surprise”.

A 1.5% rise in real internal growth – a measure of sales volumes – in the third quarter, well above analysts’ expectations of a 0.3% rise, may offer Navratil breathing space as he looks to make his mark following his sudden promotion.