Heineken plans 8,000 job cuts, $2.4bn in cost savings as pandemic hits sales

*Heineken’s Chief Executive Officer Dolf van den Brink discloses staff reductions are part of plan for $2.4 billion in cost savings as the beermaker’s full-year sales fell short of analysts’ estimates

Alexander Davis | ConsumerConnect

Heineken NV plans to cut 8,000 jobs as the beermaker’s business, as bars and restaurants suffer from the far-reaching negative effects of the Coronavirus (COVID-19) pandemic-related lockdowns.

It was gathered the beermaker Wednesday, February 10, 2021, said the staff reductions, which amount to almost a 10th of the workforce, are part of a target for 2 billion Euros ($2.4 billion) in gross savings through 2023.

About a fifth of jobs at the brewer’s headquarters are set to be eliminated in the first quarter of this year, Bloomberg report said.

Chief Executive Officer Dolf van den Brink by phone disclosed that “on the productivity side, we need a bit more of an intervention, and that shouldn’t stop in 2023.”

The world’s second-largest brewer after Anheuser-Busch InBev NV outlined additional strategic initiatives under its turnaround programme launched in 2020.

These include targeting an operating margin of 17% by 2023, and that would bring the measure of profitability into line with levels achieved before the pandemic, noted the company.

The shares fell as much as 2.1% in early trading in Amsterdam. The stock declined 6% in 2020.

The results mark the CEO’s first year at the helm ─ a baptism of fire, given the impact of the Coronavirus on pubs and the mass-market beer industry.

In Europe, report also indicates Heineken estimates that about a third of the bars it sells to were closed during 2020.

Sales last year fell 11.9% on an organic basis, more than the 10.9% decline analysts expected.

The brewer, however, expects business conditions to start improving in the second half of 2021.

Rival Carlsberg A/S recently stated that earnings would grow between 3% and 10%, but noted the guidance, which the company is legally required to provide, was extremely uncertain.