French dairy firm Danone has announced plans to cut 900 jobs in Europe over a period of two years, in response to weak sales in the continent.
For the full year 2012, the company's sales totalled €20.1bn, up 5.4% compared to the previous year. However, sales in Europe decreased 3% due to low consumer demand. Sales in markets such as Spain and Italy declined by more than 10%, and in France, the company's second-largest market, the sales were flat.
The company's net profit decreased 4% to €1.79bn for the full year 2012.
Danone has lowered the operating profit and sales growth targets in 2013, compared to 2012. It has forecast a negative trend for demand in Europe, which represents 40% of its sales, with the prices of raw materials staying high.
Danone noted that the jobs cuts will be in management and administrative positions across 26 European countries and will be implemented over a period of two years.
The elimination of 900 jobs would lower 10% of the managerial workforce and 4% of the European workforce. This is one of the largest job-cutting moves by the company and is expected to result in a one-off cost of €450m, which will be booked this year.
Danone chairman and CEO Franck Riboud said that 2013 will be a year of transition, a year aimed at returning the company's activities as a whole to strong, profitable growth in 2014.
In December, Danone announced a cost reduction and adaptation plan to generate €200m savings in Europe in the next two years. The company had said that it will lower general and administrative costs, and implement changes at organisational level by reducing jobs.
