Heineken NV is planning to cut approximately 8,000 jobs, the Dutch beer group has said, 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 that it will save €2 billion over the three years to 2023 under CEO Dolf van den Brink's "EverGreen" plan.
Savings will be achieved by redesigning its organisation, reducing the complexity and number of its products, and identifying its least effective spending, Heineken said.
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The review of its operations will result in approximately 8,000 job losses - equating to 9% of its workforce at the end of 2019 - and a related €420 million charge. Personnel expenses will be cut by approximately €350 million, it added.
The brewer said that ongoing restrictions on social gatherings and hospitality venues mean that 2021 revenue, operating profit and operating profit margin will be below levels in 2019.
It expects market conditions to improve gradually in 2021 and more into 2022, with a slow recovery in European bars and restaurants, less than 30% of which were open at the end of January.
The operating profit margin before one-offs should rise to 17% by 2023, the company said, versus 12.3% last year and 16.8% in 2019.
Heineken shares were down 2.2% at 0955 GMT on Wednesday February 10, making them 4.6% weaker in the year to date. Analysts said that 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 that it wants more top-line growth than competitors, and will push premium brands, such as Heineken, and zero-alcohol lager even more. It is also aiming to become the best digitally connected brewer to serve consumers who are increasingly looking to buy beer online.
Heineken's Van den Brink said that vaccination programmes in Europe, North America and some more developed countries in Asia will allow a return to normality this year.
"But we are a global company...Only when the whole world is vaccinated to a certain degree can we say we really come out of it," he told Reuters.
Brazil and Mexico, which are two of Heineken's biggest markets, are still struggling to deal with the pandemic.
2020 Operating Profit
Heineken's operating profit fell by 35.6% in 2020, in line with expectations.