Heineken toasts stronger than expected H1 profits

Heineken has exceeded the expectations of analysts posting a rise in revenues and net profits for the first half of 2017, with a late Easter and warm weather contributing to a strong second quarter.

Heineken’s organic revenues increased by 5.7% year-on-year to €10.47bn in the six months to the end of June

The Dutch brewer, whose brands include Heineken, Tiger and Amstel, released its half year results for 2017 on Monday, reporting a 5.7% year-on-year increase in organic revenues to €10.47bn in the six months to the end of June, up from £1.05bn the for the same period last year, outperforming analysts forecasts of a 4.1% uplift.

Overall, Heineken pulled in a net profit (beia) of €1.04m, up 10.5% organically, while operating profits increased 11.8% year-on-year to €1.8bn, compared with an average forecast of a 4.8%.

Consolidated beer volumes across Heineken’s portfolio of brands grew by by 2.6% in the first half, off the back of a strong second quarter, with organic volumes up in all four regions.

The brewer attributed this uplift to “Easter timing, good weather particularly in Europe and easier comparatives than in the first quarter.”

Asia Pacific led the pack with a 6.3% growth, followed by the Americas, Europe and Africa Middle East and Eastern Europe.

Americas and Europe driving growth

In comparison, volumes of the Heineken branded beer increased by 3.9% in the first half, with growth in all regions apart from Asia Pacific “where lower volume in China and Vietnam weighed negatively”, contributing to a 7.1% slide.

The biggest increase in Heineken brand volumes was seen in the Americas market, which increased by 8.4%, followed by Europe 5.9%, and Africa Middle East and Eastern Europe at 4.4%.

Jean-François van Boxmeer, CEO, chairman of the executive board, said: “We delivered strong results in the first half year, with all four regions contributing positively to organic growth in volume, revenue and operating profit. Europe delivered a good performance, momentum remained strong in Americas and Asia Pacific, and results improved in Africa Middle East & Eastern Europe despite continued difficult market conditions.”

“A well-balanced global footprint, sustained investment in our beer and cider brands, market leading innovations and a focus on premiumisation continue to differentiate our strategy and underpin our progress. During the period we also completed the acquisitions of Brasil Kirin and Lagunitas. Whilst economic conditions are likely to remain volatile, our expectations for the full year are unchanged.”

Acquisition update

In December 2016, Heineken confirmed its takeover of UK pub chain Punch Taverns in a deal worth £403 million, for which it is still waiting for final approval from UK competition regulators. Heineken has offered to sell dozens of pubs in the Punch estate to win approval from the Competition and Markets Authority since the deal was announced in December.

A decision is due by August 22. Subject to approval, Heineken expects the acquisition to complete by the end of August 2017.

Earlier this year, the company acquired the Brazilian business of Japan’s Kirin Holdings Company, including its beer brand Kirin, for €664 million (£564m) to become the second largest brewer in the country after AB InBev.

Brasil Kirin operates 12 production facilities and has its own distribution network in Brazil. Its brands include value beer brand Schin and Devassa, as well as speciality and premium brands including Baden Baden and Eisenbahn. Brasil Kirin also owns a soft drinks business, which currently holds a 2.1% share of the Brazilian market and includes the Itubaína brand.

Prior to this, Heineken confirmed it had acquired the remaining 50% stake it didn’t already own in Californian craft brewer Lagunitas, taking complete control of the brand.

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