Nestlé plans to lay off 16,000 employees over the next two years under the leadership of new CEO Philip Navratil. This includes 12,000 white-collar and 4,000 production-supply chain jobs. The company's Q2 profit in India decreased from ₹986 crore to ₹753 crore, while earnings increased.
Nestle major layoffs: FMCG company Nestlé has decided to lay off 16,000 employees over the next two years, following the appointment of new CEO Philip Navratil. This includes 12,000 white-collar and 4,000 production-supply chain jobs. The company's Q2 profit in India decreased from ₹986 crore to ₹753 crore, even though earnings and EBITDA saw an increase. The CEO stated that these cuts are necessary to rapidly transform the company and save 1 billion Swiss francs.
Why the CEO Took This Step
In his statement, Philip Navratil said that the world is changing rapidly, and the company must also change swiftly. This requires making some difficult but necessary decisions, including reducing the number of employees. Navratil also stated that the company will prioritize large and focused product initiatives, increased investment in advertising, and divesting underperforming units in the future.
Layoff Details
Nestlé announced that this reduction process will be completed over two years and will be implemented globally. According to the company, 12,000 people will be affected in white-collar jobs. Additionally, 4,000 jobs are already slated for cuts in production and supply chain roles. Overall, this change could have a significant impact on the company's global workforce.
Company Financial Results
Nestlé's Q2 results also help in understanding the reasons behind this change. The company's profit decreased to ₹753 crore compared to ₹986 crore in the previous year. On the other hand, the company's earnings increased from ₹5,104 crore to ₹5,644 crore. EBITDA grew from ₹1,168 crore to ₹1,237 crore, but the margin fell from 22.9 percent to 21.9 percent. Nestlé did not see the projected sales growth this year, which made the new CEO realize the need to change the company's strategy.
Nestlé shares rose 3.4 percent in pre-market trading on Julius Baer. This year, the company's price increased by 1.7 percent, which is lower compared to the Swiss Market Index's 8 percent growth. Investors have given mixed reactions to the new CEO's decisions and the company's evolving strategy.
Nestlé: Sales Improvement and Focus on Major Products
Philip Navratil joined Nestlé in 2001 and brings decades of experience. After taking charge, he hinted that previous strategies would also be continued. Divesting underperforming units, increasing advertising spend, and focusing on major product initiatives are among his priorities.
Why This Change is Necessary
Nestlé states that this change will save the company 1 billion Swiss francs, double what was initially planned. This step is difficult for the company but is necessary to maintain competitiveness in the world's changing business environment.
