Nestle to cut 16,000 jobs as CEO ignites ‘turnaround fire’

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. US import tariffs are a headwind for Nestle, despite the bulk of the company’s US 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.

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.

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 US 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.

Navratil said driving RIG-led growth was Nestle’s highest priority.

“We are fostering a culture that embraces a performance mindset, that does not accept losing market share, and where winning is rewarded,” Navratil said.

Strategic reviews of Nestle’s waters and premium beverages business and low-growth, low-margin vitamins and supplements brands are ongoing, the company said. The Swiss company maintained its 2025 outlook. It said organic sales growth should improve compared to 2024 and predicted the underlying trading operating profit margin, which excludes certain non-recurrent expenses, at, or above, 16%. For the medium-term, the forecast is at least 17%. The margin forecasts include the higher US import tariffs on Swiss goods of 39%, that came into effect in August, Nestle said.

The bulk of the 3 billion Swiss francs in cost savings is due to come in 2026-27, Nestle said, with 700 million Swiss francs in savings expected in 2025 as a whole.

Organic sales, which exclude the impact of currency movement and acquisitions, rose 4.3% in the quarter, Nestle said, above analysts’ estimates for 3.7% growth.

Quarterly sales growth was driven by pricing-led upticks in coffee and confectionery, but Greater China was a drag.

CFO Anna Manz said Nestle had been too focused on driving distribution across China and not enough on building consumer demand.

“So what you see in China is us correcting that and actually to consolidate our distribution and make it more efficient, while we build this consumer demand.”

Meanwhile Drugmaker Novo Nordisk has begun a round of layoffs in its most important market, the United States, with affected staff set to be notified between this week and next, according to an email and two sources familiar with the matter.

The time-frame for the layoffs has not previously been reported. The move comes as the Danish company behind popular weight-loss drug Wegovy looks to cut jobs globally and reduce costs in a battle with US rival Eli Lilly.

US layoffs began on Tuesday and will continue until late next week, according to a schedule in the email. They come after an acceleration of job cuts in Novo’s home market, Denmark, where it plans to eliminate 5,000 positions.

Departments expected to be informed of cuts include human resources, clinical development, rare diseases, medical and regulatory, legal, ethics and compliance, marketing and sales, finance, public affairs and others, the schedule showed.

Reuters was unable to confirm how many people would be affected. Novo is looking to shed 9,000 roles globally in a restructuring drive under new CEO Mike Doustdar, who took office in August. Novo did not immediately respond to a request for comment, but has said previously that the global process would take time and its “highest priority is to support our employees”.

Reuters