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Written by: Matt Britzman | Hargreaves Lansdown
Heineken reported half year revenue of €16.4bn, reflecting organic growth of 24.3%. That was driven by increases in both volume and pricing, 7.7% and 15.6% respectively. Beer volume grew 7.6%, driven by premium brands which saw sales rise over 10%.
Underlying operating profit rose 24.6% to €2.1bn, benefiting from volume recovery and higher prices which more than offset “significant inflationary pressures”.
For 2022, underlying operating margin is expected to post a modest improvement – in line with previous guidance. For 2023, the group’s targeting mid-high single digit improvement in underlying operation profit.
An interim dividend of €0.50 has been announced, up from €0.28 last year.
The shares were down 1.0% following the announcement.
Beers remain as much of a staple as ever, with demand showing little sign of slowing despite mounting pressures on disposable income. Sales and profit jumped at the half year mark as consumers drank more beer at higher prices. Heineken’s strong list of premium brands, from Moretti to Desperados, continue to benefit from the ongoing premiumisation trend. And it’s a good job too because cost inflation lingers and there’ll be less kickback on price rises at the higher end of the value scale.
Speaking of costs, they’re creeping up in the background. Heinekens doing a great job of keeping them from ruining the party largely due to the huge cost saving programme that’s underway. The target’s €2bn in savings by 2023, relative to the 2019 cost base and with €1.7bn expected to be delivered by the end of this year, progress is strong.
Guidance remains intact for the current year, but lingering inflation means a change in approach for 2023. Rather than looking for margin growth, Heineken’s now targeting operating profit growth instead. Markets have taken that as a sign of weakness, with shares down a touch in early trading – it’s a reflection of the uncertain environment we’re living in.
Related: Nestlé: Price Hikes Help Offset Rising Costs…for Now