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Danone To Cut Up To 2,000 Jobs; Aims For EUR 1 Bln Savings By 2023

French food company Danone SA (DANOY.PK) said Monday that it plans to cut up to 2,000 jobs in local and global headquarters. It aims to deliver 1 billion euros cost savings by 2023.

The cost savings include 300 million euros from reduced cost of goods and 700 million euros related to general and administrative costs, representing around 20% reduction in overheads costs.

The company said it will partly reinvest the expected savings to fuel growth opportunities and contribute to progress the profitable growth agenda of the company. Total one-off costs related to the new organization initiatives are expected to be around 1.4 billion euros for the 2021-2023 period.

The company said it will study relocating its global headquarters in Paris closer to its French business headquarters. The simplification will reduce around 1,500 to 2,000 positions in local and global headquarters, with up to 25% of current job positions for its global headquarters.

After 12 months of COVID, the company now forecasts its adaptation plan to return to profitable growth in less than 12 months, as soon as the second-half of 2021 and for recurring operating margin to return to its pre-COVID levels at more than 15% by 2022.

Danone reconfirmed its mid-term ambition of achieving 3% to 5% profitable like-for-like revenue growth. It now targets mid-term recurring operating margin to reach mid-to-high teen levels, with the first milestone to be above 15% in 2022.

The company also confirmed its 2020 guidance of full-year 14% recurring operating margin and the delivery of 1.8 billion euros free cash flow despite more challenging market conditions in the fourth quarter.

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