Heineken said it would cut nearly 10% of its workforce as part of a broader strategic plan to restore margins and boost productivity, after the brewery posted full-year earnings that fell short of expectations on Wednesday. Shares of Heineken HEIA, -3.12%, the world’s second-largest brewer, fell more than 2% in the Amsterdam operations.
Chief Executive Dolf van den Brink announced Wednesday that the brewery will cut 8,000 jobs, about 10% of the group’s total workforce, as part of a broader strategic plan. Heineken is targeting a € 2 billion savings by 2023 and is trying to restore tight operating profit margins to around 17% (pre-pandemic levels) by that time. Margins stood at 12.3% in 2020. The restructuring announcement came as the brewery posted annual earnings that generally fell short of expectations. Beer volumes, sales and adjusted earnings declined in the second half of the year more than analysts expected. Organic beer volumes fell 8.1% in 2020, and Heineken delivered 2 billion liters less than the previous year. Cider volumes declined by about 20%, largely due to British pub closures. Adjusted operating profit, before one-off items and depreciation, of € 2.4 billion ($ 2.9 billion) was 36% lower than profit of € 4 billion in 2019. The brewery said it expects revenue, profit and margins in 2021 remain below 2019 levels. Heineken has overcome much of the COVID-19 crisis with a new CEO at the helm. In June 2020, van den Brink replaced 15-year-old 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 for sales, and social distancing restrictions have depleted revenue. The group, which includes Amstel, Birra Moretti, Tiger and Strongbow among its brands, posted a 16% drop in sales in the first half of 2020 before a slight recovery in the third quarter. Analysts have pointed to the company’s growing debt, which currently exceeds € 18 billion, up from € 17 billion in 2019, as a possible barrier to recovery.