Nestle is set to reduce its workforce by 16,000 employees globally in a bid to enhance its financial performance. The Swiss food company, known for popular brands like Nescafe, KitKats, and pet foods, announced on Thursday that the job cuts will be implemented over the next two years. Additionally, Nestle plans to increase targeted cost savings to 3 billion Swiss francs ($5.32 billion Cdn) by the end of the following year, up from the initial target of 2.5 billion Swiss francs ($4.43 billion Cdn).
When asked about the implications of the cuts on its Canadian operations, Nestle Canada’s Senior Vice President, Catherine O’Brien, stated that the reduction will impact markets and functions globally over the next two years. Each market will devise its own plan, and specific figures for the Canadian market are not available at this stage.
Nestle aims to eliminate 12,000 white-collar positions across various locations, with an expected annual savings of 1 billion Swiss francs ($1.77 billion Cdn) by the end of the following year. An additional 4,000 jobs will be cut as part of productivity initiatives in manufacturing and the supply chain.
In response to the changing landscape, Nestle’s CEO, Philipp Navratil, emphasized the need for the company to adapt faster. The company has faced internal challenges, including the recent departure of CEO Laurent Freixe following an investigation into a undisclosed relationship with a subordinate. Navratil, a long-time Nestle executive, took over the role.
External factors such as increased commodity costs and U.S. tariffs have also impacted Nestle, leading the company to implement price hikes to offset rising expenses, particularly in coffee and cocoa. The U.S. government’s tariffs on Brazilian goods, including coffee and orange juice, have further complicated the situation. Negotiations on tariffs are ongoing as the coffee and cocoa markets continue to evolve.
Despite these challenges, Nestle’s stock saw a significant increase on the SIX Swiss Exchange, rising nearly eight percent. In the U.S., the company’s over-the-counter stock also surged by a similar percentage at the opening bell on Thursday.