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UPDATE 2-Heineken to cut 8,000 jobs to restore pre-pandemic margins

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Philip Blenkinsop
·2 min read
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* 'EverGreen' plan to save 2 bln euros by 2023

* Aims to restore operating margin to 2019 level by 2023

* 2020 operating profit down 35.6%, in line withexpectations(Recasts with job cuts)

By Philip Blenkinsop

BRUSSELS, Feb 10 (Reuters) - Heineken NV plans tocut about 8,000 jobs, the Dutch group said on Wednesday, seekingto restore operating margins to pre-pandemic levels after asharp decline in profit because of coronavirus restrictions.

The world's second-largest brewer, which makes Europe's topselling lager Heineken as well as Tiger and Sol, said it wouldmake 2 billion euros ($2.42 billion) of savings over the threeyears to 2023 under the "EverGreen" plan of Chief Executive Dolfvan den Brink.

Heineken said the savings would be achieved by redesigningits organisation, reducing the complexity and number of itsproducts and identifying its least effective spending.

The review of its operations would result in about 8,000 joblosses - equating to 9% of its workforce at the end of 2019 -and a related 420 million euro charge. Personnel expenses wouldbe cut by about 350 million euros, it added.

The company said it wants superior top-line growth and wouldpush its premium brands, such as Heineken, and zero-alcohollager even more. It also aims to become the best digitallyconnected brewer to serve consumers who are increasingly lookingto buy beer online.

Carlsberg, the world's third-largest brewer, lastweek said it was banking on most COVID-19 restrictions beinglifted in the coming months, sercing to buoy earnings in thepeak summer season.

CAUTIOUS OPTIMISM

Heineken's Van den Brink, who took charge of the company inJune, was more cautious but said vaccination programmes inEurope, North America and some more developed countries in Asiawould allow a return to normality.

"But we are a global company ... Only when the whole worldis vaccinated to a certain degree can we say we really come outof it. Directionally, we partly agree, but we have a bit ofcaution given the global footprint of our company," he toldReuters.

Brazil and Mexico, two of Heineken's biggest markets, arestill struggling to deal with the pandemic

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

The company said it expects market conditions to improvegradually in 2021 and more into 2022, with a slow recovery ofbars and restaurants in Europe.

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

Operating profit fell 35.6% in 2020, in line withexpectations.($1 = 0.8249 euros)(Reporting by Philip BlenkinsopEditing by Kim Coghill and David Goodman)