Heineken has more than doubled its first-half operating profit but warned of the impact of rising commodity costs in the second half of 2021.
In its half-year results, the brewer posted 109.3% organic growth in operating profit. The company generated net revenue of €9.97 billion, a rise of 14.1% on an organic basis.
However, Heineken says that it expects “headwinds in input costs” in the second half of the year and that rising commodity costs would have a “material” effect in 2022.
In addition to commodity cost increases, marketing and sales expenses are also expected to squeeze margins in Heineken’s second half and the company said that overall, it expects full-year financial results to remain below 2019.
In the first half of the year, beer volume grew 9.6% on an organic basis, driven by growth in the Heineken brand of 19.6%.
Beer volume grew by 19.3% in Q2, as the company lapped the impact of both widespread lockdowns and the suspension of its operations in markets including Mexico in the year-ago period.
Beer volumes were up in Q2 across the company’s Africa, Middle East & Eastern Europe, Americas and Europe segments – which recorded organic growth of 24.4%, 36.6% and 13.0%, respectively.
However, Heineken warned that pandemic recovery is not uniform across geographies and that new waves and variants of Covid-19 have led to renewed restrictions in some countries, particularly in Africa and Asia Pacific. In the latter market, beer volume declined by 8.2% on an organic basis.
“We are pleased to report a strong set of results for the first half year, whilst the pandemic continues to impact the world and our business,” said Dolf van den Brink, Heineken chairman and CEO.
“Beer volume grew +9.6%, led by strong growth in Heineken of 19.6% with over 50 markets in double-digit growth.”
“Our operating profit (beia) more than doubled driven by top-line leverage, continued cost mitigations and structural cost savings, further helped by the phasing of marketing and sales expenses into the second half.”
He continued: “Yet there is reason for caution too. Firstly, Covid-19 remains a factor, with the biggest impact currently in key markets in Asia and Africa. Secondly, we see a rise in commodity costs, which, at current levels, will start affecting us in the second half of this year and have a material effect in 2022.”
© FoodBev Media Ltd 2021
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