Nestlé to Slash 16,000 Jobs as New CEO Speeds Up Turnaround
(Bloomberg) — Nestlé SA’s new chief executive officer announced plans to slash 16,000 jobs only weeks after taking over, aiming to build on a stronger-than-expected increase in quarterly sales that lifted the Swiss foodmaker’s shares by the most in 17 years.
Philipp Navratil, who took over after Laurent Freixe was ousted for hiding a relationship with a subordinate, increased Nestlé’s target for cost savings to 3 billion Swiss francs ($3.7 billion) by the end of 2027, from 2.5 billion francs. The moves indicate the news CEO is sticking with his predecessor’s broader strategy, which included reviews and possible sales of underperforming units.
“The world is changing, and Nestlé needs to change faster,” Navratil said Thursday. “This will include making hard but necessary decisions to reduce headcount.”
The foodmaker’s stock surged as much as 8.2% in Swiss trading, the biggest gain since 2008.
The job 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. The jobs announcement came alongside a 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.
Nestlé tapped Navratil as CEO last month after ousting Freixe a year into his tenure. In the wake of the scandal, Chairman Paul Bulcke stepped down earlier than scheduled, replaced by former Inditex SA CEO Pablo Isla.
The 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.
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.
Of the planned job cuts, some 12,000 will be among white-collar staff, with the rest from manufacturing and supply chain roles.
As for building the company’s culture, “we are all measured at the same key performance indicators,” Navratil said on a call with analysts. “It will be easy to see who is performing and who’s not. We will be ruthless in assessing our people.”
The CEO identified Nestlé’s top priority as further increasing real internal growth, and added that the company is evaluating everything in its portfolio.
Welcome ‘Ambition’
“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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