Heineken N.V. reports 2020 half year results
Amsterdam, 3 August 2020 – Heineken N.V. (EURONEXT: HEIA; OTCQX:
- Net revenue (beia) organic growth -16.4%; net revenue (beia)
per hectolitre -3.6%
- Consolidated beer volume -11.5%
- Heineken® volume -2.5%
- Operating profit (beia) organic growth -52.5%
- Net profit (beia) €227 million, -75.8% organically
- Diluted EPS (beia) €0.39 (2019: €1.84).
Dolf van den Brink, CEO and Chairman of the Executive Board,
“The first half of 2020 was defined by unprecedented challenges
and I am very proud of our employees all around the world who are
adapting quickly to new emerging realities while taking care of
each other, our customers and our communities.
The Heineken® brand once again demonstrated its strength with
double digit growth in 14 markets and continued momentum of
Our bottom-line was disproportionately impacted due to the
decline in the European on-trade, as well as temporary government
restrictions on our activities in Mexico and South Africa. We have
taken mitigating actions and will further intensify our focus on
HEINEKEN has entered the crisis with a strong financial
position, a diversified global footprint, great brands, superior
consumer and customer intimacy and highly dedicated and talented
teams. Moving forward and as markets recover, we will leverage
these unique strengths to chart our next growth chapter."
profit (beia) margin
|Diluted EPS (in €)
EPS (beia) (in €)
operating cash flow
Net debt / EBITDA (beia)3
1 Consolidated figures are used throughout this report, unless
otherwise stated; please refer to the Glossary for an explanation
of non-GAAP measures and other terms used throughout this
2 Organic growth shown, except for Diluted EPS (beia) which is
3 Includes acquisitions and excludes disposals on a 12 month
In the first half of 2020, HEINEKEN’s markets and businesses
were materially impacted by the COVID-19 pandemic. Given the
unprecedented nature of the situation, HEINEKEN has increased its
disclosures. There are no changes vs the announcement of 16
UPDATE ON OUR RESPONSE TO COVID-19
Since the beginning of the COVID-19 crisis, we have been
adhering to three guiding principles. First, the health, safety and
trust of our people is of paramount importance. Second, we do
everything we can to safeguard the continuity of our business and
protect the appeal of our brands. This includes supporting the
business continuity of our customers and suppliers. And, third, we
offer our support to communities that are most impacted by the
In view of those principles, on 8 April 2020, we outlined our
commitment to our people, customers, suppliers and communities in
which we operate.
Significant efforts have been made within the organisation to
support our employees in doing their jobs safely, by working from
home where possible, and applying the standard COVID-19 preventive
measures, including physical distancing, personal hygiene and
disinfection protocols and providing sufficient personal protective
equipment. In addition, to provide some security forour employees
in these trying times, we have committed to not carry out
structural lay-offsas a consequence of COVID-19 in 2020.
We have supported our on-trade customers across all regions with
advice and tools to safely reopen, helping them set up home
delivery and on-line businesses and supporting them financially,
for example by waiving rental payments. Our Back the Bars
initiative was launched to support on-trade customers in 21
countries and has raised over €10 million.
We continued to pay all suppliers on time and have also provided
advanced payments to suppliers who were heavily impacted by
Pandemic relief totalling over €23 million has been deployed to
front-line medical facilities, including donations of water,
non-alcoholic beverages, hand sanitiser and monetary
Top-line performance was materially impacted as multiple
countries took far-reaching measures to mitigate the spread of
COVID-19 including restricted movement of populations, outlet
closures and mandatory lockdown of production facilities. At this
moment, none of our breweries are closed due to government
Net revenue (beia) declined 16.4% organically
driven by a 13.4% decline in total consolidated volume and a 3.6%
decline in net revenue (beia) per hectolitre due to adverse
channel, product and country mix effects. The underlying price mix
on a constant geographic basis was down 1.3%.
Consolidated beer volume declined 11.5%
organically. As expected, the impact of the COVID-19 crisis
deepened in the second quarter when beer volume declined 19.4%.
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. Premium volume declined high-single
digits, outperforming the rest of the portfolio, mainly driven by
the resilience of Heineken®.
Consolidated beer volume(in mhl)
Africa Middle East & Eastern Europe
Heineken® volume declined 9.0% in the second
quarter to close the first half with a 2.5% decline. Heineken® is
the most trusted international beer brand and is outperforming the
overall category. 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 particular strength in the US, Mexico
and South Africa. Following a pause, some of our global sponsorship
platforms are resuming activities for the second half of the
Heineken® volume (in mhl)
Africa Middle East & Eastern Europe
The international brand portfolio declined
high-single digits. Amstel declined in the low-teens driven mainly
by Spain and South Africa partially offset by continued strong
growth in Brazil. Sol declined in the mid-twenties driven by
Mexico. Tiger declined mid-single digits with sharp declines in
Singapore, Cambodia and Malaysia and a small decline in Vietnam. In
contrast, Desperados grew in the mid-teens, driven by France,
Poland and the Netherlands.
Cider volume declined in the high-teens to 2.1
million hectolitres. Volume declined in the mid-twenties outside
the UK, mainly driven by South Africa. New cider markets Russia,
Mexico and Vietnam grew in the high-teens. In the UK, volume
declined in the low-teens driven by pub closures.
Low & No-Alcohol (LONO) volume declined
high-single digits to 6.3 million hectolitres. The no-alcohol
portfolio declined mid-single digits, with strong growth of
Heineken® 0.0. Our LONO portfolios grew in more than 20 markets,
particularly the US, the UK, Egypt and Singapore.
Digitalisation accelerated throughout the crisis as consumers
changed shopping patterns and customers adapted to the lockdowns.
As a result, our e-commerce platforms showed
- Beerwulf, our business-to-consumer platform in Europe, had more
than 3 million visitors, half of them new. Online sales of our
home-draught systems like the Sub and Blade have more than doubled
during the lockdown.
- Six 2 Go, our business-to-consumer platform in Mexico, received
ten times the number of orders in the first six months of 2020
versus the full year of 2019.
- Our business-to-business digital platforms are operational in
24 markets. At the end of 2019, we were connected to more than 60
thousand customers in traditional channels representing more than
€1 billion of net revenue. We expect to more than double the number
of customers connected this year.
OPERATING PROFIT PERFORMANCE
Operating profit was materially impacted by the revenue decline,
incremental expenses and impairments due to the COVID-19 crisis,
partially offset through mitigation actions.
Operating profit (beia) declined 52.5%
organically, with lower profit in all regions.
Operating profit declined 94.8%. 84% of the
organic operating profit decline was driven by Europe, Mexico and
South Africa. The operational deleverage was amplified by the
volume decline in the on-trade in Europe.
Regarding the on-trade business in Europe,
HEINEKEN has a vertically integrated business model, including
wholesale in several markets as well as pubs in the UK, which
provides close proximity to customers and consumers enabling a
broader range of products, better service and deeper insight into
our customer and consumer base. While this is a long-term
competitive advantage with typically higher variable profits, it
also requires a higher fixed cost structure and explains a
disproportionate short-term drag on profit. At the end of July, we
estimate 90% of outlets in Europe have reopened.
In Mexico, beer volume contracted in the
mid-twenties as our operations were suspended in April and May. In
June, we resumed sales and customers began rebuilding inventories.
In July, we observed an increase in market restrictions including
alcohol sales bans in some states and on-trade restrictions.
In South Africa, total volume declined in the
forties, due to a ban on the sale, distribution and production of
alcohol from late March to end of May. After sales resumed in June,
a new ban on alcohol sales was implemented mid-July.
Input costs per hectolitre increased by about
10% with the combined negative impact of channel and product mix
and transactional currency effects, despite lower commodity
Other incremental expenses included higher
depreciations, credit losses, safety & protection equipment,
donations and other forms of support to our customers and
In March, we implemented cost mitigating
actions that resulted in a net organic reduction of half a
billion of other expenses (beia) in the first half. This excludes
the effects on input costs, goods for resale, transport and
depreciation. For more details, please refer to pages 14 and
BREWING A BETTER WORLD
During the first half of 2020, we continued to advance our
sustainable development commitments. Despite the significant drop
in volumes, key water efficiency and local sourcing metrics were
stable and we increased our energy from renewable sources to 21%
(2019: 19%) driven by Mexico and Vietnam. We also joined the Water
Resilience Coalition, which was launched in March this year,
pledging a commitment to collective action and net positive water
impact by 2050.
Given the circumstances, we transformed our #EnjoyResponsibly
campaign temporarily to #SocialiseResponsibly. We have redirected
part of our 10% Heineken® media investments from ‘responsible
consumption’ to ‘socialise responsibly’ campaigns. The new
Heineken® Back to the Bars campaign called ‘#SocialiseResponsibly
to keep bars open’ is meant to celebrate the return to the bars
whilst reminding consumers to embrace social distancing and other
For more details on our Brewing a Better World programmes and
definitions, please refer to our 2019 Annual Report.
EXCEPTIONAL ITEMS AND IMPAIRMENTS
The impact of exceptional items and amortization of
acquisition-related intangibles (eia) was €742 million (2019: €133
million) on operating profit and €524 million (2019: €118 million)
on net profit.
This included impairments of €548 million in
tangible and intangible assets. The impact of the crisis in
developing economies precipitated the need for these impairments.
In total, cash generating units representing €3 billion in fixed
assets were identified for impairment tests resulting in the
impairments in Papua New Guinea (€196 million), Jamaica (€138
million) and various other smaller impairment charges. For more
details on the exceptional items and impairments, please refer to
pages 30 to 32.
NET PROFIT AND LOSS
Net profit (beia) decreased by 75.8%
organically to €227 million (2019: €1,054 million). The decrease
was higher than the decline in operating profit (beia) due to
higher net finance expenses, higher non-deductible interest
expenses and other tax effects and the lower relative decline in
minority interest. Net loss after exceptional
items and amortisation of acquisition-related intangibles was €297
million (2019: €936 million gain).
CASH FLOW PERFORMANCE
Free operating cash flow amounted to an outflow
of €809 million (2019: €578 million inflow) mainly due to lower
cash flow from operating activities and an increase in working
capital driven by the change in payables.
Cash outflow related to the purchase of property, plant and
equipment (PP&E) amounted to €1,064 million (2019: €1,005
million), including payments for PP&E additions executed in
2019. The additions to PP&E executed in 2020 amounted to €484
million (2019: €760 million), a reduction of 36% as all
non-committed CAPEX was suspended from late March, unless necessary
for safety or business continuity.
HEINEKEN entered the crisis with a strong balance sheet and an
undrawn committed revolving credit facility of €3.5 billion that
matures in May 2024 and does not contain financial covenants. In
recent months, HEINEKEN has successfully secured €3 billion in
additional financing by issuing new bonds.
HEINEKEN is well prepared to meet its financial commitments,
including the €1 billion bond maturing on 4 August 2020. As a
measure of prudence, HEINEKEN announced it will deviate from its
dividend policy and will not pay an interim dividend following its
TRANSLATIONAL CURRENCY CALCULATED IMPACT
Since the latest update on 12 February 2020 a number of
currencies have depreciated significantly versus the Euro,
especially the Mexican Peso, Brazilian Real and South African Rand.
However, given the uncertainty in profit estimations for this year
it is not possible to provide a reliable estimate of the
translational currency impact.
OUTLOOK FOR FY 2020
The COVID-19 pandemic constitutes a major negative macroeconomic
development and as such it is having a significant impact on
HEINEKEN's markets and on its business in 2020. On 8 April,
HEINEKEN withdrew all guidance for 2020 given the lack of
visibility on the end date of the pandemic and the duration of its
impact. Although we observe a gradual recovery since the trough in
April across most markets, the situation continues to be volatile
and uncertain. As a consequence, HEINEKEN is only able to share
directional information for the remainder of the year.
Product and channel mix is expected to continue to adversely
impact results, especially in Europe, as the on-trade continues to
be more affected than the off-trade. As a consequence, input costs
per hectolitre are expected to continue to be significantly higher
than last year.
We have taken mitigating actions and will further intensify our
focus on costs, balancing the reduction of discretionary expenses
with providing sufficient support behind our brands and route to
market. Non-committed supply chain CAPEX will continue to be
suspended, while commercial CAPEX will resume if and when required
to support our current and future top-line growth.
Significant uncertainty remains on the impact of the COVID-19
pandemic, including risks related to containment measures, supply
chain continuity, cyber-security incidents and macro economic
downturn in general.
Given the circumstances, we expect to continue to provide
incremental disclosures of the material effects of the COVID-19
crisis on our markets and businesses. The next update will come
with our third quarter trading update.
Federico Castillo Martinez
Ackermann / Robin Achten
Relations Manager / Senior Analyst
INVESTOR CALENDAR HEINEKEN N.V.
for Q3 2020
|Full Year 2020
CONFERENCE CALL DETAILS
HEINEKEN will host an analyst and investor conference call in
relation to its 2020 HY results today at 10:00 CET/ 9:00 GMT. The
call will be audio cast live via the company’s website:
www.theheinekencompany.com. An audio replay service will also be
made available after the conference call at the above web address.
Analysts and investors can dial-in using the following telephone
Kingdom (Local): 020 3936 2999
Netherlands (Local): 085 888 7233
646 664 1960
locations: +44 20 3936 2999
Participation password for all countries: 239940
Editorial information:HEINEKEN is the world's most international
brewer. It is the leading developer and marketer of premium beer
and cider brands. Led by the Heineken® brand, the Group has a
portfolio of more than 300 international, regional, local and
specialty beers and ciders. We are committed to innovation,
long-term brand investment, disciplined sales execution and focused
cost management. Through "Brewing a Better World", sustainability
is embedded in the business. HEINEKEN has a well-balanced
geographic footprint with leadership positions in both developed
and developing markets.
We employ over 85,000 employees and operate breweries,
malteries, cider plants and other production facilities in more
than 70 countries. Heineken N.V. and Heineken Holding N.V. shares
trade on the Euronext in Amsterdam. Prices for the ordinary shares
may be accessed on Bloomberg under the symbols HEIA NA and HEIO NA
and on Reuters under HEIN.AS and HEIO.AS. HEINEKEN has two
sponsored level 1 American Depositary Receipt (ADR) programmes:
(OTCQX: HEINY) and Heineken Holding N.V. (OTCQX: HKHHY). Most
recent information is available on HEINEKEN's website:
www.theHEINEKENcompany.com and follow us on Twitter via
Market Abuse RegulationThis press release contains
price-sensitive information within the meaning of Article 7(1) of
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Disclaimer: This press release contains forward-looking
statements with regard to the financial position and results of
HEINEKEN’s activities. These forward-looking statements are subject
to risks and uncertainties that could cause actual results to
differ materially from those expressed in the forward-looking
statements. Many of these risks and uncertainties relate to factors
that are beyond HEINEKEN’s ability to control or estimate
precisely, such as future market and economic conditions,
developments in the ongoing COVID-19 pandemic and related
government measures, the behaviour of other market participants,
changes in consumer preferences, the ability to successfully
integrate acquired businesses and achieve anticipated synergies,
costs of raw materials, interest-rate and exchange-rate
fluctuations, changes in tax rates, changes in law, change in
pension costs, the actions of government regulators and weather
conditions. These and other risk factors are detailed in HEINEKEN’s
publicly filed annual reports. You are cautioned not to place undue
reliance on these forward-looking statements, which speak only of
the date of this press release. HEINEKEN does not undertake any
obligation to update these forward-looking statements contained in
this press release. Market share estimates contained in this press
release are based on outside sources, such as specialised research
institutes, in combination with management estimates.
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Grafico Azioni Heineken (EU:HEIA)
Da Ago 2020 a Set 2020
Grafico Azioni Heineken (EU:HEIA)
Da Set 2019 a Set 2020