Nestle announced Thursday that it will cut 16,000 jobs—about 6 % of its roughly 277,000‑strong workforce—as the company sharpens its cost‑cutting program and seeks to regain investors’ trust. New chief executive Philipp Navratil said the cuts will help the world’s biggest packaged‑food firm boost efficiency and improve margins.
Bigger cost‑saving goal
The company has raised its aim for cost savings to 3 billion Swiss francs (about $3.8 billion) by the end of 2027, up from the 2.5 billion francs target it set in 2023. Navratil revealed that 12,000 mid‑level staff will be let go over the next two years, with a further 4,000 reductions in manufacturing and supply‑chain roles. The 3 billion‑franc goal will largely be achieved in 2026‑27, with 700 million francs of savings expected in 2025.
Why the cuts?
Nestle’s sales have stalled in recent quarters, and the firm is taking a hit from a 39 % U.S. import tariff on Swiss goods that went live in August. At the same time, consumer confidence is weak and shoppers are shifting toward healthier food options. Navratil said the company has to adapt faster than its competitors and that a “performance mindset” will drive growth.
New leadership and shareholder reaction
The news came after a period of managerial upheaval. Navratil replaced Laurent Freixe, who was dismissed in September over a breach of company policy. Chairman Paul Bulcke stepped down, and former Inditex chief Pablo Isla took the top seat. Nestle shares jumped about 8 % in early trading, a sign that investors are paying attention to the turnaround plan.
Spotlights on results
In the third quarter, Nestle’s real internal growth—a measure that excludes currency swings and acquisitions—rose 1.5 %, topping analysts’ 0.3 % expectation. The company closed the quarter with a 4.3 % rise in organic sales, slightly better than the 3.7 % forecast.
Targeted cost cuts will also affect the company’s water and premium‑beverage segments, where slow growth and thin margins persist. CFO Anna Manz said China remains a challenge; the firm is reorganising distribution there while building broader consumer demand.
2025 outlook unchanged
Nestle maintained its 2025 guidance, projecting at least 16 % operating profit margin for the year and a minimum of 17 % in the medium term. The company expects cost savings to lift margins even with the U.S. tariffs in place.
Nestle’s new CEO is positioning the company for a leaner, faster operation while maintaining a focus on essential brands such as KitKat, Nespresso and Maggi. The 16,000‑job cut is being framed as “fuel to the turnaround fire,” giving Nestle a chance to steer back toward growth and reassure a skeptical market.
Source: New York Post
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