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Cartons of Chuckie, a Nestle chocolate-flavoured milk drink, at the company's factory in Batangas province, the Philippines, on April 2, 2019. (Veejay Villafranca/Bloomberg/Getty Images via CNN Newsource)
By Ana Nicolaci da Costa, CNN
London (CNN) — Nestlé will cut around 16,000 jobs worldwide over the next two years as it works to slash costs, including through automation, the world’s largest food company said Thursday.
Most of the layoffs – about 12,000 – will affect white-collar professionals as Nestlé targets “operational efficiency,” including by automating processes and using shared services, the company behind such brands as KitKat and Nesquik said in a statement.
Another 4,000 roles will go in manufacturing and the supply chain as part of measures to improve productivity. The overall job cuts will amount to almost 6% of Nestlé’s workforce.
“The world is changing, and Nestlé needs to change faster,” new CEO Philipp Navratil said in the statement. “This will include making hard but necessary decisions to reduce headcount.”
The announcement comes as the rise of artificial intelligence has fueled fears over potential job losses in various industries. The chief executive of Anthropic, a leading AI lab, warned in May that AI could cause a dramatic spike in unemployment.
Nestlé says on its website that it uses AI in a number of functions, including research and development. In its last annual report, it also said it employs automation and advanced analytics in promotional activities, such as work on discounts and in-store displays.
The planned layoffs add to turmoil at the Swiss company after an unexpected removal of its previous chief executive in early September. Laurent Freixe was dismissed for failing to disclose a romantic relationship with a direct subordinate, which breached Nestlé’s code of business conduct.
The company’s organic sales, a measure of underlying growth, rose 4.3% in the third quarter, it also said Thursday. Nestlé reiterated its commitment to investing over the medium term despite “ongoing risks from macroeconomic and consumer uncertainties.”
Nestlé’s biggest market is North America. Consumers in the United States have grown pessimistic in recent months as they worry about inflation, which could worsen because of higher US tariffs. However, consumer spending has held up so far.
Nestlé’s stock jumped early on Thursday. By 7:30 a.m. ET, it was trading 7.6% higher.
The-CNN-Wire
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