Nestle to axe 16,000 jobs as new CEO targets sales growth
Navratil, the former head of Nespresso, replaced Laurent Freixe, who was fired in September as chief executive over an undisclosed relationship with a direct report
Highlights:
- Nestle reports better-than-expected third quarter sales growth
- Growth led by higher prices for coffee and confectionery
- Nestle's first quarterly results under new CEO Navratil
- Nestle to reduce headcount in coming two years, says CEO
Nestle will axe 16,000 jobs as it tries to raise sales volumes, new CEO Philipp Navratil said on Thursday, as the world's largest packaged food company reported better-than-expected sales growth thanks to pricing-led upticks in coffee and confectionery.
Navratil, the former head of Nespresso, replaced Laurent Freixe, who was fired in September as chief executive over an undisclosed relationship with a direct report.
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Nestle has endured an unprecedented period of managerial turmoil, with Chairman Paul Bulcke stepping down early to make way for former Inditex chief Pablo Isla two weeks later.
A 1.5% rise in real internal growth (RIG) - 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.
As Nestle tries to become more efficient, Navratil said there would be 12,000 white collar job cuts, in addition to a further 4,000 headcount reduction as part of ongoing initiatives in manufacturing and supply chain. Nestle employs around 277,000 people worldwide.
The Swiss maker of KitKat chocolate bars, Nespresso coffee and Maggi seasoning has been fighting to reignite stalling sales growth and arrest a steep share price slide as costs have risen and debt levels have climbed amid rising investor pressure.
Navratil said driving RIG-led growth was Nestle's top priority and that it would raise its cost savings target to 3 billion Swiss francs ($3.77 billion) from 2.5 billion francs by the end of 2027.
"We are fostering a culture that embraces a performance mindset, that does not accept losing market share, and where winning is rewarded," Navratil said in a statement. "The world is changing, and Nestlé needs to change faster."
