By Giulia Petroni
Danone SA on Monday set its mid-term operating margin and growth targets as it laid out the details of its structural reorganization, including workforce reduction plans.
The French food company said it now targets mid-term recurring operating margin at mid-to-high teen levels. It also expects cost savings of 1 billion euros ($1.19 billion) by 2023, part of which will be reinvested in its growth plan and the rest to secure margin expansion.
The company said it expects to return to profitable growth as soon as the second half of 2021, and its recurring operating margin to be at pre-Covid-19 levels--more than 15%--by 2022. It also confirmed its expects to reach 3% to 5% profitable revenue growth on a like-for-like basis in the mid term.
As previously announced, the company is reorganizing its structure, moving from a category-led to a local organizational model. These measures, which will be gradually implemented in 2021, will also lead to reductions of around 1,500 to 2,000 positions in local and global headquarters.
The total one-off costs related to organizational activities are expected to be around EUR1.4 billion for the 2021-23 period.
Danone also confirmed its guidance for the full-year, saying it targets a recurring operating margin at 14% and EUR1.8 billion in free cash flow in spite of challenging market conditions in the fourth quarter.
Write to Giulia Petroni at firstname.lastname@example.org
(END) Dow Jones Newswires
November 23, 2020 01:58 ET (06:58 GMT)Copyright (c) 2020 Dow Jones & Company, Inc.