Nestle’s new CEO Philipp Navratil has said on Thursday that the company will cut 16,000 jobs. The cut represents 5.8% of Nestle’s around 277,000 employees.
Navratil said Nestle had raised its cost savings target to three billion Swiss francs ($3.77 billion) from 2.5 billion francs by the end of 2027. This is happening as the company seeks to cut costs and win back investor confidence.
U.S. import tariffs are a headwind for Nestle, even though the bulk of the company’s U.S. sales are 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 Nestlé needs to change faster,” Navratil said. “This will include making hard but necessary decisions to reduce headcount over the next two years. We will do this with respect and transparency.”
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“We will be bolder in investing at scale and driving innovation to deliver accelerated growth and value creation,” Navratil said. “We are fostering a culture that embraces a performance mindset, that does not accept losing market share, and where winning is rewarded,” he added.
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 U.S. import tariffs, while costs have risen and debt levels have climbed, increasing pressure from investors.
Bernstein analysts said that Nestle’s quarterly results “add fuel to the turnaround fire.” The analysts also said that the headcount reduction is a “significant surprise.”
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,” he said.
Navratil recently replaced former CEO Laurent Freixe after the latter was dismissed for his failure to disclose a romantic relationship with a subordinate. Freixe had reportedly been with Nestle for nearly 40 years but stepped up to the global chief executive role last September, replacing Mark Schneider.
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Nestle has 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 U.S. import tariffs on Swiss goods of 39% that came into effect in August, the company said.
The bulk of the three 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. It also said that organic sales which exclude the impact of currency movement and acquisitions, rose 4.3% in the quarter.
Quarterly sales growth was driven by pricing gains in coffee and confectionery, but performance in China remained weak. According to CFO Anna Manz, Nestlé had focused too heavily on expanding distribution across China and not enough on strengthening 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,” Manz said.