LONDON (ShareCast) - (Sharecast News) - Danone is to cut up to 2,000 jobs, or 2% of its global workforce, as part of a wide-reaching overhaul of the business intended to save more than €1bn by 2023.
The French food and drink company, the owner of Activia yoghurts and Evian water among other brands, has been rocked by the Covid-19 pandemic. Costs have risen, while sales of bottled water slumped as restaurants closed and people worked from home.

Separately, its baby formula unit has been hit by the falling birth rate.

Chief executive Emmanuel Faber said: "The global pandemic has accelerated a number of the patterns of the food revolution and altered others."

Faber said that some trends - such as growing demand for healthier food - had worked in Danone's favour.

But he continued: "Conversely, we are confronted with factors such as the closure of out-of-home channels affecting our water business, with the reduction of SKU ranges by our retail partners, or the announced dip in birth number dynamics, but also with the elevated cost of operating with sanitary measures and the costs of securing procurement and physical flaws of our products."

In response, Danone intends to move away from its traditional category-led model towards a more local focus, dubbed Local First. "In this reinvention of food, the most prominent paradigm accelerated by the pandemic is undoubtedly the trend towards local," said Faber.

The shift is intended to return autonomy to local business units and reduce decision-making processes. That in turn will change the role of headquarters and other central functions, and a potential relocation of the head office out of Paris is being considered.

It also means between 1,500 and 2,000 jobs will be lost, with up to 25% of the roles being lost from global headquarters.

The overhaul is expected to save €1bn by 2023, including a 20% reduction in overhead costs. It is also intended to help return Danone to profitable growth in less than 12 months, and return the recurring margin to pre-Covid levels of more than 15% by 2022.

The mid-term target is for 3% to 5% profitable like-for-like revenue growth.

Last month, Faber announced plans to sell off underperforming businesses and pledged to overhaul the group's management structure.

As at 1020 GMT, shares in the Paris-listed stock were off just over 1%.

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