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Heineken Sees 2020 Profit Growth As Some Commodity Costs Ease

By Donna Ahern
Heineken Sees 2020 Profit Growth As Some Commodity Costs Ease

Heineken, the world's second largest brewer, expects to benefit from lower barley and aluminium costs this year after 2019 earnings rose exactly in line with expectations.

The Dutch maker of Heineken, Europe's top-selling lager, as well as Tiger, Sol and Strongbow cider, said on Wednesday revenues should rise on the back of higher volumes and prices, coupled with consumers shifting to more expensive beers.

Together with a more moderate rise of input costs, this should result in a mid-single digit percentage rise in operating profit this year, barring negative economic or political developments.

In particular, Heineken said it was not yet possible to assess the impact of the coronavirus outbreak on its business.

"We are cautious, we are just looking at the situation, but for sure it is not paralysing, that would be too big a word, but it will have some consequences," chief executive Jean-Francois van Boxmeer said on a conference call.


Profit Growth Estimates

Analysts' average estimate is for 6% profit growth this year, according to a company-compiled consensus. Chief Financial Officer Laurence Debroux declined to put a numerical range on Heineken's forecast.

The guidance is the same as that given by Heineken a year ago. However, the company tempered profit hopes in October, saying operating profit would rise by only 4%.

The final figure for 2019 before one-offs was €4.02 billion ($4.39 billion), a 3.9% rise and exactly in line with the market consensus.

On a regional basis, profit figures were also similar to expectations, with a slight outperformance in Africa, Middle East and Eastern Europe and the Americas against slight underperformance in Asia Pacific and Europe.


Heineken, whose chief executive will step down in June after 15 years in charge, said it had closed the year with 4.1% beer volume growth in the fourth quarter, helped by strong increases in Brazil, Vietnam and Cambodia.

Overall, profit growth was strongest in Asia, notably in Vietnam, Heineken's second most profitable market, and in the Americas, where Heineken has expanded in Brazil and has its largest market, Mexico.

News by Reuters, edited by Donna Ahern, Checkout. Click subscribe to sign up for the Checkout print edition

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