Nestlé has announced plans to eliminate 16,000 jobs worldwide, marking a significant step in its aggressive cost-cutting strategy. This decision is aimed at improving the company’s financial performance amidst various challenges. The Swiss food giant, known for brands such as Nescafé and KitKat, revealed this news on Thursday.
Details of the Job Cuts
The job cuts are slated to occur over the next two years. Nestlé plans to eliminate:
- 12,000 white-collar positions globally.
- 4,000 roles related to productivity improvements in its manufacturing and supply chain.
Financial Goals
As part of its restructuring efforts, Nestlé aims to increase its targeted cost reductions. The company is now looking to cut costs by 3 billion Swiss francs (approximately $3.76 billion) by the end of next year, up from an earlier goal of 2.5 billion Swiss francs ($3.13 billion).
Recent Leadership Changes
This announcement follows a turbulent period for Nestlé, which included the dismissal of CEO Laurent Freixe. His ousting occurred after an investigation into an undisclosed relationship with a subordinate. Freixe had been in the role for just a year and has been succeeded by Philipp Navratil, a long-standing Nestlé executive. Furthermore, Chairman Paul Bulcke also stepped down early amid these changes.
External Challenges
Nestlé faces numerous external pressures affecting its operations. Notably:
- Rising commodity costs.
- U.S. tariffs on Brazilian imports, including coffee and orange juice, introduced by the Trump administration.
- Increased cocoa prices due to weather-related supply issues.
Brazil is crucial for U.S. coffee supply, accounting for about 30% of the market. Colombia and Vietnam follow with roughly 20% and 10%, respectively.
Market Response
Despite these challenges, shares of Nestlé saw a nearly 8% increase on the SIX Swiss Exchange following the announcement. The stock also experienced a significant uptick in U.S. markets.
Philip Navratil emphasized the need for change, stating, “The world is changing, and Nestlé needs to change faster.” As the company navigates these transformations, it remains focused on adapting to the evolving market landscape.
