French food company Danone will cut up 2,000 jobs, or 2 per cent of its global workforce, as part of a reorganisation aimed at giving more power to country managers and squeezing out efficiencies to cope with the pandemic.
The company employs about 350 people in the Republic. It said it does not yet know whether any Irish jobs will be affected.
The maker of Evian bottled water and Activia yoghurts said the changes would save €1 billion by 2023, and promised that its recurring operating margin would return to pre-Covid levels of above 15 per cent by 2022.
The announcement comes one month after chief executive Emmanuel Faber announced an overhaul of the group's management, as well as plans to sell underperforming businesses and cut its product portfolio.
Danone has fared worse than many of the larger consumer groups it competes with since the pandemic began in part because of the products it sells. Unlike Reckitt Benckiser or Procter & Gamble, it does not sell the cleaning products that have been bestsellers since Covid-19 erupted.
Its bottled water business has also suffered from the closures of restaurants and working from home, which caused a 17 per cent contraction in sales the first nine months. Nor has it benefited much from consumers returning to familiar brands of packaged foods, which has boosted demand at companies such as Kellogg’s and Kraft-Heinz.
Danone also has problems not linked to Covid-19, such as weak demand at its baby formula unit as birth rates fall, especially in the key market of China.
The situation has left Mr Faber grappling with how to reverse a near 30 per cent decline in the shares this year. The performance is far worse than the 2 per cent rise for Unilever, Nestlé's 2 per cent decline, and the MSCI Europe consumer staples index's 4 per cent decline.
With the shares trading at six-year lows, investors have signalled a growing mistrust of Danone’s ability to deliver on successive strategic plans to improve profitability and growth. – Copyright The Financial Times Limited 2020