Nestlé plans to reduce its global workforce by approximately 16,000 over the next two years as part of the company’s cost-saving strategy.
The headcount reduction is part of the ‘Fuel for Growth’ program, whose cost-cutting target has been raised to CHF 3.0 billion (US$3.8 billion) from CHF 2.5 billion ($3.1 billion) by the end of 2027.
The job cuts, subject to consultation where applicable, will include 12,000 white-collar professionals across functions and geographies. The company expects this to drive annual savings of CHF1 billion ($1.26 billion) by the end of 2027.
A further 4000 staff will also be laid off as part of ongoing productivity initiatives in manufacturing and supply chain.
“The world is changing, and Nestlé needs to change faster,” said CEO Philipp Navratil. “This will include making hard but necessary decisions to reduce headcount over the next two years.”
“We will do this with respect and transparency… The actions we are taking will secure Nestlé’s future as a leader in our industry,” he added.
The company said it will also focus on driving cash generation to ensure sustainable shareholder returns, with plans to deliver free cash flow above CHF8 billion this year.
For the third quarter, Nestlé reported organic sales growth of 4.3 per cent. The company noted Greater China continued to be a drag during the period, with new management now in place to transform this business.
Nine-month organic sales grew 3.3 per cent, with 0.6 per cent real internal growth (RIG) and 2.8 per cent pricing. Sequential improvements were recorded across major markets, global businesses, and categories during the period.
The firm expects to record annual organic sales growth for the full year, although the comparison base will be tougher in the fourth quarter.
“Driving RIG-led growth is our number one priority. We have been stepping up investment to achieve this, and the results are starting to come through. Now we must do more and move faster to accelerate our growth momentum,” added Navratil.
Earlier this month, Nestlé chairman Paul Bulcke stepped down from the board earlier than originally planned, with vice chairman Pablo Isla set to assume the role.
