Nestle (NSRGY.US) reported better-than-expected sales growth in the third quarter and plans to lay off 16,000 employees globally over the next two years.

Nestle (NSRGY.US) announced better-than-expected sales growth on Thursday, mainly due to increased revenue from its confectionery and coffee products as a result of price hikes. Actual internal growth (RIG, a measure of sales volume) in the third quarter rose by 1.5%, far exceeding analysts' expectations of a 0.3% increase. Nestle stated that organic sales (excluding currency fluctuations and acquisitions) grew by 4.3% in the third quarter, higher than analysts' expected increase of 3.7%. The company maintained its outlook for 2025, emphasizing that organic sales growth should improve compared to 2024 and forecasting that the underlying operating profit margin will reach or exceed 16%. This is also the first sales announcement from Nestle, the world's largest packaged food company, since Philippe Naratil took over as CEO. Naratil, who previously served as head of the Nespresso business, took over in September from former CEO Laurent Freixe, who was fired for undisclosed relationships with subordinates. Nestle has experienced a period of unprecedented management change, with Chairman Paul Bulcke stepping down early and being replaced two weeks later by former Inditex CEO Pablo Isla. This performance may provide some breathing space for Naratil, who suddenly received a promotion and is eager to make his mark. Due to rising costs, increasing debt levels, and investor pressure, this Swiss company, which produces KitKat chocolates, Nespresso coffee, and Maggi seasonings, has been struggling to revive stagnant sales growth and stem the sharp decline in stock prices. Naratil stated that driving development led by actual internal growth is Nestle's top priority, and the company will make layoffs and increase cost savings targets from 2.5 billion Swiss francs to 3 billion Swiss francs (about 3.77 billion US dollars) by the end of 2027. Naratil said in a statement, "We are nurturing a culture that embraces performance thinking, does not accept market share losses, and rewards victorious outcomes. The world is changing, and Nestle needs to transform at a faster pace." Nestle plans to lay off 16,000 employees, one of a series of measures taken by new CEO Philippe Naratil to revive the Swiss food manufacturer. The layoffs will cut 12,000 white-collar jobs, and an additional 4,000 employees will be laid off as part of ongoing manufacturing and supply chain improvement initiatives. Nestle has approximately 277,000 employees globally. The company stated on Thursday that the layoffs will account for about 6% of its total workforce and will be completed over the next two years. In a statement on Thursday, Naratil said, "The world is changing, and Nestle needs to transform at a faster pace. This will include making difficult but necessary layoff decisions in the next two years."