French food group Danone said on Monday it planned to cut its product range by up to 30% next year and become a more “local-first” organization worldwide, as part of the company’s efforts to cut costs to adapt to a post COVID-19 market.
The world’s largest yoghurt company announced its intention ahead of an online investor meeting, the first in a series of updates covering plans announced last month.
To ensure decisions are pushed down to a local level, Danone International will be organised under five zones – Europe, Asia/Africa and Middle East, Greater China and Oceania, CIS and Turkey and Latin America.
In addition to giving local business units more autonomy, the company announced six additions to its executive committee and forecast 1 billion euros ($1.19 billion) in cost savings by 2023, including a 20% reduction in overhead costs.
The company also plans to reduce the range of products it sells by 10-30% in the next year, focusing on faster-growing and more profitable products.
It gave no update on asset disposals, telling reporters there would be more news on this during the first half of the year.
It would also target a mid-term recurring operating margin at a mid-to-high teen level, targeting 15% in 2022.
The maker of Activia yoghurt and Evian water reiterated its 2020 full-year guidance for 14% recurring operating margin and the delivery of 1.8 billion euro free cash flow.
The company wants to turnaround performance that has suffered in the pandemic due to fewer people buying bottled water or specialised nutrition products in China.
($1 = 0.8420 euros)
Photo: A file photo of Aptamil baby formula cans at a production line of Danone Nutricia Early Life Nutrition division, in Cuijk, The Netherlands. EPA/JERRY LAMPEN
