Nestle starts to cut costs in effort to boost profitability

Nestle starts to cut costs in effort to boost profitability

Thomas Mulier

Nestle plans to cut up to 500 computer-service jobs in its home market of Switzerland as chief executive Mark Schneider aims to boost profitability at the world’s largest food company.

Nestle is shifting information-technology jobs to locations including a tech hub in Spain, the company said.

Its Nespresso coffee unit is also moving jobs to Spain and Portugal and will offer positions to 80 employees affected by reorganisation.

The unit will also open a site in Italy to develop Nespresso boutique stores.

Schneider is starting Nestle’s biggest restructuring program in Switzerland, reducing staff there by 5% after having faced pressure from investors such as Dan Loeb to cut costs.

The strength of the Swiss franc in recent years has ramped up the company’s expenses. Chief financial officer Francois-Xavier Roger has accelerated Nestle’s five-year restructuring plan and predicted €605m reorganisation costs this year.

“Nestle remains fully committed to its home base,” Peter Vogt, head of human resources, said.

The company said it’s investing €300m in the country this year. “The relationship between Nestle and Switzerland is mutually beneficial.”

The shares were slightly lower in the latest session and have dropped about 7% since last June, when Loeb’s Third Point announced a stake of more than €3m.

The government of the Swiss canton of Vaud, where Nestle is based, said it has requested a meeting with Nestle management this week to discuss ways to reduce the impact of the restructuring.

Nestle officials also assured the government that the company has no further plans to cut jobs in Switzerland, according to a statement.

Nestle said it plans to make the cuts in Switzerland over the coming 18 months.

The company will offer employees training and help to switch to other positions and accept voluntary departures.

In recent weeks, Nespresso workers in Lausanne, Switzerland, have protested against a plan to add more weekend shifts and lengthen workweeks to 43 hours from 41 at its capsule factories.

The company had 323,000 employees worldwide in 2017, ranking sixth among European employers.

Nestle’s Swiss staff has swelled to more than 10,000 last year from about 6,700 in 2003.

Bloomberg

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