Nestle to cut 500 jobs in biggest Swiss restructuring plan

The Nestle logo is pictured on the company headquarters building in Vevey, Switzerland February 18, 2016. — Reuters pic
The Nestle logo is pictured on the company headquarters building in Vevey, Switzerland February 18, 2016. — Reuters pic

GENEVA, May 29 — Nestle SA plans to cut as many as 500 computer-service jobs in its home market of Switzerland as Chief Executive Officer 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 today. Its Nespresso coffee unit is also moving jobs to Spain and Portugal and will offer positions to 80 employees affected by that 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 per cent 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 700 million francs (US$706 million) of reorganisation costs this year.

“Nestle remains fully committed to its home base,” Peter Vogt, head of human resources, said in a statement. The company said it’s investing €300 million (approx. RM1.38 billion) in the country this year. “The relationship between Nestle and Switzerland is mutually beneficial.”

Government request

The stock traded 0.4 per cent lower at 2:37pm in Zurich. It has dropped about 7 per cent since last June, when Loeb’s Third Point LLC announced a stake of more than US$3.5 billion.

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.

Nairobi Office

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.

Separately, Nestle also said today it plans to close the headquarters of its Equatorial Africa unit in Nairobi, Kenya, as costs to maintain it have been too high over the past decade given the size of the business.

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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