Nestlé SA plans to cut 16,000 jobs as new Chief Executive Officer Philipp Navratil seeks to accelerate a turnaround at the Swiss foodmaker just weeks after taking over.
The reductions, amounting to about 6% of the workforce, will occur over the next two years, the maker of Nespresso coffee capsules and KitKat candy bars said Thursday. Nestlé raised its target for cost savings to 3 billion Swiss francs ($3.7 billion) by the end of 2027, from 2.5 billion francs.
“The world is changing, and Nestlé needs to change faster,” Navratil said in a statement Thursday. “This will include making hard but necessary decisions to reduce headcount.”
Nestlé tapped Navratil, a company insider, as CEO last month after ousting his predecessor Laurent Freixe a year into his tenure for allegedly hiding a romantic relationship with a subordinate. In the wake of the scandal, Chairman Paul Bulcke stepped down earlier than scheduled, replaced by former Inditex SA CEO Pablo Isla.
The announcement on jobs comes alongside a stronger-than-expected 4.3% rise in third-quarter sales, driven by higher prices and improved real internal growth — a key measure of volumes closely watched by analysts and investors.
“Although still very fragile, we believe that this set of results will help Nestlé partly restore investors’ trust,” said Jean-Philippe Bertschy, an analyst at Vontobel.
Nestle shares are indicated 3.4% higher at Julius Baer in premarket trading. The foodmaker has risen 1.7% this year, lagging behind the 8% increase in the Swiss Market Index.
Nestlé’s management shuffle created turmoil at the top of a company known for its staid corporate culture, and left the new leadership duo with the task of presenting a plan to revive volume growth and tackle governance issues.
Welcome ‘Ambition’
A Nestlé veteran of more than 20 years who most recently ran the Nespresso business, Navratil has indicated he’ll maintain Freixe’s strategy of boosting spending on advertising, betting on fewer but bigger product initiatives and getting rid of underperforming units.
On a call with reporters Thursday, he identified Nestlé’s top priority as further increasing real internal growth, and added the company is evaluating everything in its portfolio.
“We welcome Navratil’s ambition to foster a culture that does not accept losing market share and where winning is rewarded, which sounds more assertive than before,” said James Edwardes Jones, an analyst at RBC Capital Markets.
Jones added that the beat on real internal growth in the quarter was important as this has been the biggest area of concern for investors.
Navratil’s predecessor had begun a restructuring that included the potential sale of struggling vitamin brands and finding a potential partner for Nestlé’s bottled water business, which Freixe separated into a standalone unit.
Any job losses through divestments won’t be counted toward the 16,000 planned reductions, Navratil told reporters on a call.
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