French dairy company Danone - most famous for its yoghurt brand - is set to slash 2,000 jobs, including one-in-four at its global headquarters as a part of a Covid reshuffle.
Photo: Reuters
The company is reportedly targeting €1 billion in cost-savings by 2023, according to an official company statement and is looking to restructure its team from the ground up.
The cuts represent around 2% of global Danone staff.
Emmanuel Faber, the CEO of Danone, admitted the company wanted to build a 'local-first' organisation and insisted the group needed to 'reinvent' itself coming out of the pandemic, hoping the food company can become more flexible in the wake of the crisis by switching to a more regional model.
He added: "Our business entities in countries will not anymore be dependent on a specific global category organisation but will be unified in one, single, local business unit playing with strength and efficiency on the whole range of local specificities to win in our capability to serve our clients and consumers and therefore to grow."
The announcement came ahead of the company's investor day scheduled for Monday afternoon and a month after their announcement of a complete restructure of its management hierarchy, including its CFO resigning.
Danone is also set to review its portfolio to analyse other avenues for cost-cutting, currently planning on reducing their stocklist by between 10-30% within the next year, hoping to corner key markets and focus on faster-growing and more profitable ventures.
Mr Faber said: "This year has shown our businesses could be hurt significantly in their competitiveness by external shocks in countries where we operate. In this very volatile world for the next several years, we need to create a safety margin."
Total one-time costs for the endeavour will be around €1.4 billion between 2021-23.
This will equate to between 1,500-2,000 jobs losses in local and global headquarters, according to Faber.
Danone has also revealed that its adjusted operating margin should exceed 15% in 2022, with the expectation of it rising above 20% later, reaching record levels for the company.
As a part of this reshuffling, Danone will be splitting operation into two "macro-regions" - North America and International. The International region will be further split into five zones with each of their presidents to become a part of the group's executive committee.
Other food competitors such as Nestlé have been operating under regional models for years, which has made them more flexible in handling global crises such as Covid-19.
The job cuts will do little to alleviate some aspects of the company faltering during the pandemic.
Its bottled water division has also been heavily affected by restaurant closures and lockdown measures resulting from the pandemic, which caused sales to drop by 17% for the first nine months of the year.
Shares in Danone have slumped by 29% this year, and these jobs cuts represent a sizable portion of their active workforce in key locations.
It is currently unknown if the French dairy company will be looking to refill these roles at a later date.
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