Nestlé to cut 16,000 global jobs

jobs cut represent 5.8% of Nestlé's 277,000 employees

In 2023, Nestlé said it would close the Wyeth baby formula plant in Askeaton, Co Limerick. Picture: Press 22

Nestle will cut 16,000 jobs as the world's largest packaged food company seeks to cut costs and win back investor confidence.

The jobs being cut represent 5.8% of Nestlé's around 277,000 employees. New CEO Philipp Navratil said Nestlé had raised its cost savings target to 3 billion Swiss francs (€3.3bn) from 2.5 billion francs by the end of 2027.

The food giant's subsidiary in Ireland employs 68 people, according to the 2023 financial accounts, who work in sales, distribution and administration roles. Nestle Ireland Ltd, which imports, markets and distributes various products, reported turnover of €143.6m for 2023, a 15.6% rise on the previous year.

Nestle also owns Wyeth Nutritionals, which operated a baby formula manufacturing plant in Askeaton, Co Limerick, for export to China. In 2023, Nestlé said it would close the plant on a phased basis up until March 2026, with the loss of 542 jobs.

The company pointed to the sharp decline in births in China as the reason for the closure. In their own accounts, Wyeth put a €472.4m cost on the winding down of the Askeaton plant.

US import tariffs are a headwind for Nestlé, despite the bulk of the company's US sales being manufactured locally, while food producers across the board are grappling with fragile consumer confidence and changing habits as people seek to eat more healthily.

"The world is changing, and Nestle needs to change faster," Navratil said.

Nestlé has experienced an unprecedented period of managerial turmoil, with Navratil replacing Laurent Freixe, who was fired in September as chief executive over an undisclosed relationship with a direct report.

Chairman Paul Bulcke then stepped down early to make way for former Inditex chief Pablo Isla two weeks later.

Navratil said the 12,000 white-collar job cuts over the next two years, in addition to a further 4,000 headcount reduction as part of ongoing initiatives in manufacturing and the supply chain, were part of an efficiency push.

The Swiss maker of KitKat chocolate bars, Nespresso coffee and Maggi seasoning has been fighting to reverse stalling sales growth and arrest a share price slide as it battles US import tariffs, while costs have risen and debt levels have climbed, increasing pressure from investors.

Nestle's quarterly results "add fuel to the turnaround fire," Bernstein analysts wrote in a note, naming the headcount reduction as a "significant surprise".

A 1.5% rise in real internal growth — 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.

Navratil said driving RIG-led growth was Nestlé's highest priority.

"We are fostering a culture that embraces a performance mindset, that does not accept losing market share, and where winning is rewarded," Navratil said.

Strategic reviews of Nestlé's waters and premium beverages business and low-growth, low-margin vitamins and supplements brands are ongoing, the company said.

Additional reporting Reuters