The Swiss food giant Nestlé is taking a coup to accelerate cost savings and, in the process, please investors. The first measure of the new management team appointed in the last month, led as president by Pablo Isla and CEO Philipp Navratil, is a plan for 16,000 layoffs in the next two years, almost 6% of its total workforce, to accelerate and increase its cost savings plans. News that, together with the positive results shown in the third quarter, has triggered market euphoria, rewarding Nestlé with a 9.3% rise in the stock market.
The food multinational has not detailed how it will distribute the layoffs by geography. Yes, it has specified that, of those 16,000 jobs, 12,000 will correspond to executive positions in all functions and markets, which will allow annual savings of 1,000 million Swiss francs, almost the same amount in euros, by 2027. Another 4,000 will come from factories and the supply chain. With these measures, Nestlé expects to achieve cost savings of 3 billion Swiss francs in two years, 500 million more than initially planned. The cost of these layoffs will be 2 billion Swiss francs.
“They are difficult decisions, but necessary,” Navratil himself told analysts, after his first earnings call. “Historically, we have avoided being totally transparent about these types of changes, and I want to be,” he said. This has justified the adjustment to turn Nestle “into an agile company, that makes decisions quickly, that generates impact and that also takes advantage of its scale in terms of the way we work.”
The food company has 4,000 workers in Spain, although Nestlé Spain claims to be unaware of the specific impact of the announcement on its local workforce, according to Europa Press. In 2023, the subsidiary carried out 120 incentivized resignations among its workforce, an adjustment that was justified by changes in consumer habits and the rise of white label.
The Independent Trade Union Center and Civil Servants (CSIF), a union with a presence in Nestlé Spain, demands that the company “urgently calm down” the employees, with a “security of jobs.” In addition to the headquarters, located in Esplugues de Llobregat, Barcelona, Nestlé has 10 factories in Spain.
New strategy
Navratil, who for years has led the operations of Nespresso, one of the key areas of Nestlé’s business, was appointed CEO of the group in mid-September, after he revealed that his predecessor, Laurent Freixe, had a romantic relationship with a subordinate that he had not reported. He had barely been in office for a year. In just over 12 months, Nestlé has had three CEOs, the same number as in the previous 50 years.
An earthquake that also accelerated the arrival of Pablo Isla to the presidency, scheduled for April 2026, and effective from October 1. Isla did not intervene yesterday in the presentation of third quarter results.
“In recent months our organization has gone through many changes. Despite this, we have closed a good third quarter. I want to thank our teams for staying focused on the business and embracing the transformation that lies ahead,” Navratil told investors.
The third quarter results show revenue growth of 4.3%, the best percentage in seven quarters, although largely due to price increases. Until September, Nestlé had sales of 65,869 Swiss francs, 71,000 million euros at the current exchange rate, 2% lower than a year earlier.
In Navratil’s new roadmap, the priority will be organic growth and volumes, as explained yesterday. “We will be bolder in investing at scale and driving innovation. We must have a winning bid: where we are not performing well, I will act urgently. Third, it is essential that we build a culture that generates and rewards performance. And finally, we are accelerating our business transformation and our cost savings plans to build a stronger company,” he summarized.
The 49-year-old Austro-Swiss executive announced that he will not be influenced by “prejudices or preconceived ideas” when making decisions. To do this, four questions will be asked: “Is this a growth category? Does it have an attractive return profile? Are we positioned to win? Are we winning?” he anticipated. And he acknowledged that what he doesn’t like is that the areas with the greatest growth potential only represent 10% of sales. “Stagnant growth is not enough.”
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