Swiss food giant Nestlé launches a radical plan to accelerate cost savings. Just a few weeks after , former president of Inditex, as president of the group, and Philip Navratil as CEO, the manufacturer has announced that it will eliminate 16,000 jobs worldwide in the next two years, 5.8% of its total workforce of around 277,000 employees. The company has not specified the affected countries.
Nestlé has outlined that the plan “includes approximately 12,000 administrative professionals in different functions and geographies,” plus another 4,000 in manufacturing and the supply chain, according to a statement. With this plan, the group hopes to generate annual savings of 1,000 million Swiss francs (1,074 million euros) by the end of 2027, bringing the total cost cutting to 3,000 million francs in that year, 500 million more than previously planned.
The food company has 4,000 workers in Spain, although Nestlé Spain has claimed to be unaware of the specific impact of the announcement on its local workforce, according to Europa Press. The Independent Trade Union Center and Civil Servants (CSIF), a union with a presence in Nestlé Spain, has asked the company this Thursday to ensure employment in the country, and has demanded that Nestlé “urgently calm down” the employees, with a “guarantee of jobs” in the face of the “concern” caused by the announcement of layoffs.
The company’s headquarters in Spain are located in Esplugues de Llobregat, Barcelona. Nestlé installed its first factory in Spain in La Penilla de Cayón (Cantabria) in 1905 and currently has 10 production centers distributed in five autonomous communities, it explains on its website.
“The world is changing and Nestlé needs to change faster. This will include making difficult, but necessary decisions to reduce the workforce in the next two years,” Navratil, who took office last September after the company had a romantic relationship with a colleague, said in a note.
The plan, the company explains, is based on “a greater focus on operational efficiency, including leveraging shared services and process automation.”
The group also announced better-than-expected quarterly sales data, with a 1.5% rise in real internal growth – a measure of sales volumes – in the third quarter, well above analysts’ expectations for a 0.3% increase. After the announcement, the company’s shares have skyrocketed 8% on the stock market. “We are promoting a performance mentality, which does not accept losing market share and where winning is rewarded,” added Navratil.
In the first nine months of the year, Nestlé recorded a reduction in sales of 1.9%, reaching 65,869 million Swiss francs (71,000 million euros).
For the end of the year, the Swiss company maintained forecasts for an improvement in organic sales growth and anticipated that the profit margin will remain at 16% or above. These estimates include the 39% US tariffs on Swiss products, which came into effect in August, Nestlé said.
