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    Tuesday, July 30, 2019

    Higher Aluminum, Technology Costs Hit Heineken’s Profits in First-Half

    Heineken NV reported lower profits in the first-half, despite seeing a boost in global beer volumes. The company said that its earning was hit by aluminum costs as well as investments in e-commerce and technology upgrades, among others.

    Consolidated beer volumes was up by 3.1%, with brand Heineken® growing 6.9% and in double-digits in Brazil, Mexico, South Africa, Russia, Nigeria, UK, Portugal, Germany and Romania. The company notes that Heineken® zero alcohol has expanded to 51 markets across the globe.
    Net profit for the six months to the end of June fell to €936 euros ($1.04bn), from €950 in the prior year.
    Net revenue grew by 5.6% organically to €11.45bn, driven by premiumisation and pricing.

    Commenting on the results, the CEO of Heineken N.V, Jean-François van Boxmeer, said: “Top-line performance was again strong in the first half of 2019, with organic net revenue growth across all regions and double digit growth in Asia Pacific as well as Africa, Middle East and Eastern Europe.
    In Nigeria, beer volume rose mid-single digit, with the premium and mainstream portfolios growing double digit, led by Heineken®, Star and Maltina. South Africa saw double-digit growth, led by brand Heineken®, Amstel and Strongbow, despite difficult economic conditions.

    Beer volumes grew low-single digit in Ethiopia, negatively impacted by a price increase at the beginning of the year and continued social unrest. Despite a fragile economy, beer volumes in the DRC accelerated in the second quarter, resulting in double-digit growth for the half year, in line with the total market. Egypt saw mid-single digit volume growth, driven by strong performance of the LONO portfolio.

    Elsewhere, beer volumes grew 2.9% organically in the Americas, with growth led by Brazil and Mexico, more than offsetting volume declines in the US and Haiti. In Mexico, beer volume grew low-single digit, held back by lower promotional activity and adverse weather in the North of the country, whereas in Brazil, beer volumes grew high-single digit, with continued double-digit growth of both the premium and mainstream portfolios. In the USA, beer volume declined by mid-single digit. Heineken® volumes were flat including the benefit from the introduction of Heineken® 0.0.

    Consolidated beer volumes in Asia Pacific grew by 10.4%, with double digit growth in Vietnam and Cambodia.
    In Europe, beer volumes declined by 1.5% organically due to poor weather and a challenging comparable base with the FIFA World Cup last year.

    Looking forward to the rest of the year, the company expects continued volatility in economic conditions; superior top-line growth, driven by volume, price and premiumisation; mid-single digit increase of input and logistic costs per hectoliter; and continued cost management initiatives and productivity improvements, together with investment in e-commerce and technology upgrades.
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    Item Reviewed: Higher Aluminum, Technology Costs Hit Heineken’s Profits in First-Half Rating: 5 Reviewed By: BrandIconImage
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