Yahoo Finance Heineken to slash 8,000 jobs as pandemic hits sales
WATCH: Heineken to cut 8,000 jobs as Covid-19 pandemic hits beer sales
Dutch brewer Heineken (HEIA.AS) said it will cut around 8,000 jobs as part of an organisational restructure, through which it hopes to make €2bn (£1.8bn, $2.4bn) gross savings by 2023. That’s almost 10% of the firm’s 85,000 employees.
The company’s shares ticked down 1.8% in Amsterdam on Wednesday morning.
The reduction in headcount will save around €350m, but with an initial restructuring charge of €420m.
The company said the timelines of restructuring will vary depending on the specific circumstances of its local operations, including a reduction of the personnel costs at the head-office “by a run-rate of about 20%” to be implemented at the end of the first quarter of 2021.
Meanwhile, the economic fallout of the coronavirus pandemic, with restaurants and pubs closed in many countries for long periods of time, hit the company’s revenue last year, as it swung to a loss in 2020.
The company posted a net loss of €204m for the year, down from €2.2bn profit year-on-year. Revenue fell 17% to €23.8bn.
Heineken’s beer volumes sold shrank 8.1%. Sales fell by 11.9% on an organic basis, “a steeper decline than anticipated,” noted Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
COVID-19 continued “to have a material impact on our top-line performance, affecting all geographies and markets as governments across the world took measures to mitigate the contagion including restricted population movement, social distancing, outlet closures and temporary lockdowns of production facilities,” the company said.
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Going forward, it said it expected the pandemic to continue to impact its business in the first half of 2021 but hoped market conditions would gradually improve in the second part of the year, with the roll-out of vaccines.
“With little prospect of drinkers quenching their thirst with a beer at a bar in many of its crucial markets any time soon, the COVID-19 hangover is set to linger a lot longer for Heineken. It’s now expecting operating profits and margins to be below 2019 levels this year, with only a slow recovery forecast,” said Streeter.
She added that Heineken’s resilience has been hampered by its burdensome debt pile “which has limited investment and firepower to deal with ongoing pandemic woes. That’s why cost cutting is now front and centre of its plan going forward”
Streeter noted that as the pandemic has shifted shopping online, “if Heineken can focus on developing its own digital platform to connect customers to favourite brands, it could bring the refreshing revival of sales.’’
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