By Jack Denton
Heineken said it would cut nearly 10% of its workforce as part of a wider strategic plan to restore margins and boost productivity, after the brewer posted full-year earnings that missed expectations on Wednesday.
Shares in Heineken /zigman2/quotes/205347870/delayed NL:HEIA +0.08% /zigman2/quotes/206429207/delayed UK:0O26 -0.90% /zigman2/quotes/206351165/composite HEINY -0.11% , the world’s second largest brewer, fell more than 2% in Amsterdam trading.
Chief Executive Dolf van den Brink announced on Wednesday that the brewer will cut 8,000 jobs, around 10% of the group’s total workforce, as part of a wider strategic plan.
Heineken is targeting €2 billion in savings by 2023 and attempting to restore adjusted operating profit margins to around 17% — pre-pandemic levels — by that point. Margins stood at 12.3% in 2020.
The restructuring announcement came as the brewer posted full-year earnings that broadly missed expectations. Beer volumes, sales and adjusted earnings all declined more than analysts had expected in the second half of the year.
Organic beer volumes fell 8.1% in 2020, with Heineken delivering 2 billion fewer liters than in the year prior. Volumes of cider declined nearly 20%, largely due to British pub closures.
Adjusted operating profit — before exceptional items and amortization — of €2.4 billion ($2.9 billion) was 36% lower than the €4 billion profit in 2019.
The brewer said it expects revenue, profits and margins in 2021 to remain below 2019 levels.
Heineken has navigated much of the COVID-19 crisis with a new chief executive at the helm. In June 2020, van den Brink took over from 15-year CEO Jean-François van Boxmeer, who is credited with doubling the size of Heineken during his time in charge.
The COVID-19 pandemic and waves of national lockdowns have hit brewers hard. Heineken and its rivals rely on crowded bars, restaurants and events like concerts for sales, and social-distancing restrictions have dried up revenues.
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The group, which includes Amstel, Birra Moretti, Tiger and Strongbow among its brands, saw sales drop 16% in the first half of 2020 before a slight recovery in the third quarter. Analysts have pointed to the company’s growing debt pile — currently more than €18 billion, up from €17 billion in 2019 — as a possible barrier to recovery.