Nestlé to axe 16,000 jobs as new boss intensifies cost-cutting push

Nestlé’s new boss has said he will slash 16,000 jobs in the next two years in the company’s first trading update since previous chief executive Laurent Freixe was sacked last month over an undisclosed romantic relationship.

The cuts, which amount to close to 6 per cent of the Nestlé’s total workforce, were announced by Philipp Navratil on Thursday as he set out his plan to boost sales, make bigger cost savings and focus on the company’s best-performing divisions.

Shares in the Swiss-listed company rose 7.8 per cent in early trading on Thursday as the company reported better than expected sales growth for the third quarter.

“The world is changing and Nestlé needs to change faster. This will include making hard but necessary decisions to reduce headcount over the next two years,” said Navratil.

Nestlé, the consumer goods group behind brands such as Kit Kat and Nescafé, said the cuts would include 12,000 of Nestlé’s 118,000 white-collar roles, and a further 4,000 of its 158,000 jobs in the manufacturing and supply chain.

Freixe’s sacking, followed two weeks later by the resignation of chair Paul Bulcke, has destabilised the company at a time when it was already under pressure to boost growth and reduce debt.

Navratil, Nestlé’s third chief executive in just over a year, announced he would accelerate his predecessor’s cost-saving plan and increase targeted cost savings to SFr3bn ($3.7bn) by 2027 from the previous goal of SFr2.5bn, in a bid to free up cash.

Nestlé has suffered two years of slowing sales volume growth as shoppers, sick of price rises, cut back on spending and trade down to cheaper own-label goods.

Sales rose to Sfr65.9bn ($83bn) in the first nine months of the year, a 3.3 per cent increase on an organic basis, but exchange rate fluctuations meant that reported net sales fell 1.9 per cent from the same period in 2024.

The company reported real internal growth — its measure for the change in sales volume — of 0.6 per cent after years of declines, in a sign that its efforts to win back consumers were paying off.

Navratil said on Thursday that driving volume growth was “our number one priority”. In the third quarter, volumes rose 1.5 per cent, well ahead of the 0.3 per cent rise forecast by analysts.

Jean-Philippe Bertschy, analyst at Vontobel, said Navratil’s comments indicated Nestlé was “going in the right direction”.

“Although still very fragile, we believe that this set of results will help Nestlé partly restore investors’ trust,” he said.

Investors are hoping that Navratil and new chair Pablo Isla, the former boss of Spanish retail group Inditex, will review the company’s portfolio of businesses and consider divestments to reduce debt, which has almost doubled since 2020. 

Among the suggestions are to sell the confectionery business or frozen food brands, or reduce the company’s 20.1 per cent stake in French beauty group L’Oréal.

Nestlé this year separated its European waters business, which includes brands such as Perrier, into a standalone entity, a move that paves the way for a potential reduction of its ownership.

In July it launched a strategic review of its mainstream vitamin brands.