Danone to undergo structural reorganisation, cut 2000 jobs

This cost-cutting move will help save $ 1.19 billion for the food-products company

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Danone SA, has decided to slash 2000 jobs, as a part of its structural reorganisation plans and cost-cutting measures.

The French food company is expected to save $ 1.19 billion by 2023. A part of this amount will be reinvested in its growth plan and the rest will go towards securing margin expansion.

This move will redirect the French food giant to the profit trajectory path by the second half of 2021. It is expected to recover its pre-Covid profit margin in two years’ time. Danone is also expected to reach the three to five per cent profit margin in its mid-term growth target.

The Company’s shift from a category-led to a local organisational model, will be gradually implemented in 2021 with 1500-2000 job cuts, globally. At least one in four jobs in its global headquarters will be cut. These job cuts amount to two per cent of its total workforce.

Danone started with a sustainability approach in the beginning of 2020, and is now changing to address its internal management shortcomings.

The Company is willing to move its headquarters closer to its French base in Paris. This will help it revive its European dairy division and cope with the losses in its bottled water division, with the pandemic forcing restaurants to close their shutters.

Abandoning its layered hierarchy, Danone is looking at giving more authority to local management.

Its operating margin is expected to exceed 15 per cent by 2022, as the investors and the Company itself adapt to the major changes.

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