Nestlé boss wastes no time with the reorganization
Published: Thursday, Oct 17th 2024, 12:20
Back to Live Feed
The new Nestlé CEO Laurent Freixe is already making his mark on the company after just a few weeks in office. In future, his managers will gather around him in Vevey. He is also reducing the size of the Executive Board, merging geographical zones and lowering the annual guidance. After initial skepticism, investors like the spirit of optimism.
In future, Nestlé will again consist of three geographical Zones, as in the past. The "Greater China" and North America regions, which were only managed separately at the beginning of 2022, will return to Zone Asia and Zone Americas respectively.
In a statement on Thursday, Freixe justified the changes with simpler collaboration: "The reduced Group Executive Board and close cooperation between our managers at headquarters will simplify our work, speed up decision-making processes and give our global initiatives greater momentum."
Management downsized
The CEO is also reducing the size of the Executive Board from 15 to 12 members. Two Swiss nationals will also take on key roles in the new Executive Board: Nespresso boss Philipp Navratil will join the Executive Board and will now report directly to Freixe. Anna Lenz, currently Country Head of Nestlé Portugal, will become Head of Human Resources.
The CEO also wants to have control over the two areas of IT and sustainability. Chris Wright, who is responsible for IT, now reports directly to the CEO, as does Antonia Wanner, Head of Sustainability. With the reorganization, all key units that drive financial results and corporate change now report directly to the CEO.
Nine-month figures well below expectations
The fact that he can drive the transformation forward so quickly is due in no small part to Freixe's 38 years of experience at the world's largest food company. "I am in the fortunate position of already knowing the Nestlé business very well," he said in a conference call.
Nestlé's poor performance has been reflected in its share price in recent months. In September, the company's market capitalization fell to its lowest level since 2019. Freixe's goal is now to get the supertanker back on track.
Annual targets lowered
The figures presented on Thursday also showed that there is an urgent need for action. Nestlé generated total sales of CHF 67.1 billion in the first nine months of 2024, which corresponds to organic growth of 2.0 percent. The company is therefore likely to miss its previous annual target of organic sales growth of "over 3.0 percent". Freixe has therefore adjusted it downwards.
Nestlé will still grow organically by "around 2.0 percent" in 2024 and the operating margin should be "around 17 percent" instead of slightly above 17.3 percent as previously assumed, according to the CEO. In addition, the margin in 2025 will even be slightly lower than in 2024, as investments will first have to be made to boost growth. And the positive effects of efficiency increases will only take effect with a time lag, explained CFO Anna Manz.
Shortly after the stock market opened, Nestlé shares fell sharply and marked a new multi-year low. Analysts complained that the figures were even worse than feared. However, the initial skepticism soon gave way to a more hopeful mood. The announcements showed "that the new CEO is fully committed to his work", commented one stock market observer.
Freixe will then give a detailed insight into his plans for the company at the company's Capital Markets Day in November.
©Keystone/SDA
English 
German 
French 
Spanish 
Arabic