Heineken: Beer Performed Well but Inflation Weighs on the Future

Written by: Matt Britzman | Hargreaves Lansdown

Heineken had underlying net revenue of €21.9bn for the full year, up 12.2% on an organic basis. That reflects growth in all geographies, except Asia Pacific. That meant underlying operating profit grew 43.8%, to €3.4bn.

Beer volumes grew 4.6%, led by strong performance in the premium range. 

The group expects to be “significantly impacted by inflation and supply chain resilience pressures” and plans to increase prices as a result - which “may lead to softer beer consumption.”

The board is proposing a final dividend of €0.96 per share.

The shares were up 1.1% following the announcement. 

“Markets seem to be taking the rather shaky outlook comments in their stride this morning, with Heineken shares up a touch over 1% in early trading. Management warned of significant impact from inflation and supply chain pressures, with costs expected to rise in the mid-teens - bad news for beer lovers as that means prices are only heading one way, up. But crucially, consumers seem to be brushing aside inflation concerns and sticking to the more premium brands – that’s where Heineken should be able to bump up prices without too much of an impact on volumes.

Focusing on today’s results, Heineken delivered some pretty good numbers with all regions beating the company’s forecast in the second half, and operating profits for the year 3.6% higher than expected. There was also some more positive news on the cost saving operation which is well on its way to delivering the €2 billion in savings by 2023 that management was looking for, so that should help provide some longer-term protection from rising costs.

It was pleasing to see the non-alcoholic options continuing to move on, with Heineken 0.0, the global brand leader pushing growth into the thirties. Non-alcoholic alternatives have made their way into over 100 markets now and should be a genuine growth avenue for the business as consumers are becoming ever more conscious about how much they drink.”

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