Heineken to cut 8,000 jobs to restore pre-pandemic margins

BRUSSELS — Heineken NV plans to cut about 8,000 jobs, the Dutch 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 make 2 billion euros ($2.42 billion) of savings over the three years to 2023 under the “EverGreen” plan of Chief Executive Dolf van den Brink.

Heineken said the savings would be achieved by redesigning its organization, reducing the complexity and number of its products and identifying its least effective spending.

The review of its operations would 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 would be cut by about 350 million euros, it added.

The company said it wants superior top-line growth and would push its 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, the world’s third-largest brewer, last week said it was banking on most COVID-19 restrictions being lifted in the coming months, searching to buoy earnings in the peak summer season.

Cautious optimism

Heineken’s Van den Brink, who took charge of the company in June, was more cautious but said vaccination programs in Europe, North America and some more developed countries in Asia would allow a return to normality.

“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

The brewer said that ongoing restrictions meant 2021 revenue, operating profit and operating profit margin would be below levels in 2019.

The company said it expects market conditions to improve gradually in 2021 and more into 2022, with a slow recovery of bars and restaurants in Europe.

Its operating profit margin before one-offs is expected to reach 17% by 2023, the company said, compared with 12.3% last year and 16.8% in 2019.

Operating profit fell 35.6% in 2020, in line with expectations.

($1 = 0.8249 euros)