Breakingviews - Nestlé's Reductions Signal a Larger Overhaul Ahead

Written by Emily J. Thompson, Senior Investment Analyst

Source: Reuters

Updated: Oct 16 2025

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Source: Reuters

Workforce Reduction: Nestlé's new CEO, Philipp Navratil, announced a reduction of nearly 6% of the workforce, amounting to 12,000 white-collar jobs, as part of a broader cost-cutting initiative aimed at improving profitability and closing the valuation gap with competitors.
Sales Growth and Valuation: The company reported a 1.5% rise in real internal growth, surpassing analyst expectations, and saw a nearly 9% increase in share price, leading to a valuation of 18 times forward earnings, which is an improvement from two years ago.
Strategic Investments: Navratil is focusing on turning around low-growth products, such as Gerber baby food and soluble coffee, which account for a significant portion of revenue, while also considering the sale of the frozen food division to reinvest in faster-growing segments like nutrition and health science.
Future Outlook: By offloading underperforming assets and investing in high-growth areas, Navratil aims to enhance Nestlé's profitability and potentially regain a premium valuation for shareholders, moving beyond temporary gains.

About the author

Emily J. Thompson

Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.