Netherlands: Heineken’s earnings plummet by half

Heineken has reported half-year earnings which have declined by more than half. The Dutch brewing group issued today preliminary and unaudited results for the first half year of 2020, saying that “markets and businesses were significantly impacted by the COVID-19 pandemic.”In Europe off-trade, beer volume grew in the mid-teens and market share increased in key markets. However, given Heineken’s strong position in the on-trade and the structural differences between channels, operating profit was disproportionally affected as on-trade outlets were closed for a large part of the second quarter.

Operating profit declined organically by 52.5%. Net profit declined by 75.8%, leading to a diluted EPS of EUR 0.39. Exceptional items will include around EUR 550 million of impairments on tangible and intangible assets, leading to a reported net loss of around EUR 300 million.

As expected, the impact of the COVID-19 crisis deepened in the second quarter of 2020. After a low point in April, volume started to gradually recover into June as lockdowns were lifted around the world and customers restored depleted inventories. Beer volume was most affected in the Americas and Africa, Middle East and Eastern Europe regions with a decline in the mid-teens due to full lockdowns in Mexico and South Africa, followed by Europe with a high-single digit decline, whilst Asia Pacific showed the highest resilience driven by Vietnam.

The Heineken brand performed well in relative terms with a 2.5% decline. The brand grew double digits in 14 markets, including Brazil, China, the UK, Poland, Germany, Ivory Coast and South Korea. Heineken 0.0 grew double digits with growth across all regions and with particular strength in the US and Mexico.

Last week, Heineken’s rival Carlsberg posted a 15% drop in second-quarter sales with an organic decline in operating profit of 8.9% in the first six months of the year. This is considerably less than Heineken’s decline in the same period and puts pressure on its new new chief executive, Dolf van den Brink, who took over last month from veteran Jean-François van Boxmeer.

Heineken will provide more information when it unveils audited 2020 half-year results report on 3 August 2020.

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