Heineken set to slash 8 000 jobs after profits are cut by Covid-19 restrictions
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INTERNATIONAL - HEINEKEN plans to cut about 8000 jobs, the Dutch beer group said yesterday, seeking to restore operating margins to pre-pandemic levels after a sharp decline in profit because of coronavirus restrictions.
The world’s second-largest brewer, which makes Europe’s top selling lager, Heineken, as well as Tiger and Sol, said it would save €2 billion (R35.76bn) over the three years to 2023 under chief executive Dolf van den Brink’s “EverGreen” plan.
Savings would be achieved by redesigning its organisation, reducing the complexity and number of its products and identifying its least effective spending, Heineken said.
The review of its operations would result in about 8 000 job losses – 9 percent of its workforce at the end of 2019 – and a related €420 million charge. Personnel expenses would be cut by about €350m, it added.
The brewer said ongoing restrictions on social gatherings and hospitality venues meant 2021 revenue, operating profit and operating profit margin would be below the levels of 2019.
It expected market conditions to improve gradually in 2021 and more into 2022, with a slow recovery in European bars and restaurants, less than 30 percent of which were open at the end of January.
The operating profit margin before one-offs should rise to 17 percent by 2023, the company said, versus 12.3 percent last year and 16.8 percent in 2019. Analysts said the cautious 2021 outlook and the fact that large restructuring only brought margins back to 2019 levels weighed on the stock.
“Underwhelming” was the verdict of Bernstein Securities beverage analyst Trevor Stirling of the margin goal.
The brewer said it wanted more top-line growth than competitors and would push premium brands, such as Heineken, and zero-alcohol lager. It also aimed to become the best digitally connected brewer to serve consumers who are increasingly looking to buy beer online.
Carlsberg, the world’s third-largest brewer, said last week that it was banking on most Covid-19 restrictions being lifted in the coming months, serving to buoy earnings in the peak summer season.
Heineken’s Van den Brink, who took charge in June, was more cautious, but said vaccination programmes in Europe, North America and developed countries in Asia would allow a return to normality this year.
Operating profit fell 35.6 percent in 2020, as expected.