Major Workforce Reduction Announced
Nestle will cut approximately 16,000 jobs worldwide, representing about 6% of its global workforce, as new CEO Philipp Navratil accelerates the company’s turnaround efforts, according to reports released Thursday. The consumer goods giant stated that 12,000 white-collar positions will be eliminated immediately, with an additional 4,000 roles to be reduced over the next two years.
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Accelerated Cost-Saving Initiatives
The workforce reduction forms part of an expanded cost-savings program that has been accelerated under Navratil’s leadership, sources indicate. Under former CEO Laurent Freixe, Nestle had already announced a program worth 2.5 billion Swiss francs ($3.14 billion), but this has now been increased to 3 billion Swiss francs with a target completion date by the end of 2027.
Mixed Quarterly Performance
Despite the restructuring news, the company posted better-than-expected results in several key areas. According to the report, Nestle achieved 4.3% organic growth in the third quarter as it navigates challenging market conditions including U.S. tariffs and rising raw material prices for commodities like cocoa and coffee beans.
Notably, Real Internal Growth (RIG) returned to positive territory at 0.6% growth in the third quarter, analysts suggest. This improvement comes after a miss on RIG in the second quarter that had negatively impacted Nestle’s stock performance. Ahead of the results, HSBC analysts had reportedly expected RIG to return to positive territory due to “easier comparatives, incrementally greater benefits from Nestle’s own actions plus reduced elasticity effects from price increases.”
Regional Performance Variations
The company’s performance showed significant regional disparities, with Greater China continuing to underperform, according to the analysis. The report states that this region negatively impacted organic growth by 80 basis points and RIG by 40 basis points. Nestle indicated that new management is now in place and executing a transformation plan for the underperforming business unit.
Product Portfolio and Market Position
Nestle’s diverse product portfolio, which includes popular brands like Nescafe instant coffee, Nespresso, and KitKat, has helped the company maintain market position despite economic headwinds. The company’s strategy of focusing on winning products while turning around underperformers reportedly contributed to the better-than-expected third quarter sales.
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Industry Analyst Perspective
Jon Cox, head of European consumer equities at Kepler Chevreux, suggested that “Overall, it is extremely positive and certainly looks operationally as if the company has turned the corner with the better performance while the management upheaval over the summer fades into the background.” Cox added that he expects the stock to react very positively to the developments.
Broader Industry Context
The restructuring at Nestle comes amid significant shifts across multiple industries. Recent reports indicate similar strategic moves in technology, with gaming platforms adapting to new hardware formats, while the artificial intelligence investment boom continues to expand. The venture capital industry also faces its own challenges with changing risk dynamics, and geopolitical factors remain relevant as the UK government addresses international relationship claims.
Forward-Looking Strategy
According to reports, Nestle’s accelerated turnaround plan under new CEO Philipp Navratil represents a significant shift in operational strategy. The company appears to be balancing immediate cost-cutting measures with longer-term growth investments, particularly in product categories that have shown resilience amid current market uncertainties.
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