By Philip Blenkinsop
BRUSSELS (Reuters) - Heineken (OTC:HEINY) NV plans to cut about 8,000 jobs, the Dutch beer group said on Wednesday, 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 euros ($2.4 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.
The review of its operations will result in about 8,000 job losses - equating to 9% of its workforce at the end of 2019 - and a related 420 million euro charge. Personnel expenses will be cut by about 350 million euros, 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 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, making them 4.6% weaker in the year to date. 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.
MORE GLOBAL, MORE CAUTION
The brewer said it wanted more top-line growth than competitors and would push premium brands, such as Heineken, and zero-alcohol lager even more. It also aims to become the best digitally connected brewer to serve consumers who are increasingly looking to buy beer online.
Carlsberg (OTC:CABGY), the world's third-largest brewer, last week said 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 some more developed countries in Asia would 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. Directionally, we partly agree, but we have a bit of caution given the global footprint of our company," he told Reuters.
Brazil and Mexico, two of Heineken's biggest markets, are still struggling to deal with the pandemic.
Operating profit fell 35.6% in 2020, in line with expectations.
($1 = 0.8249 euros)