Heineken full year profits dip 35.6% prompting 8,000 job cuts globally

NETHERLANDS –Dutch multinational brewing company, Heineken has reported a full-year operating profit of €2.42 billion (about US$2.93 billion), representing an organic decrease of 35.6% .

As the pandemic took its toll on the company’s global business ,the Dutch brewer said that sales in all regions declined causing its 2020 net revenue fall by 11.9% to €19.72 billion (about US$23.91 billion.

Loss in operating profit was in particular driven by performance in Europe – due to on-trade closures – Mexico, South Africa and Indonesia.

Operations in Mexico were suspended throughout most of the second quarter, while South Africa experienced a Covid-related suspension of all alcohol companies in Q2 and a ban on the sale of alcohol.

 Indonesia suffered from lockdown impacts throughout most of the year and the absence of international tourism in the key Bali region.

The company’s consolidated beer volumes declined organically by 8.1% for the full-year with premium beer volume outperforming the broader portfolio in the majority of its markets.

In Africa, Middle East & Eastern Europe, volumes fell organically by 9.2%. The Americas recorded a 7.5% decline, while Asia Pacific saw a 7.9% drop and Europe an 8.2% decline.

Meanwhile, the Heineken brand grew double-digits in 25 markets including Brazil, China, the UK, Poland, Singapore, Nigeria and Germany.

The non-alcoholic variant Heineken 0.0 – which has now rolled out in 84 markets – grew strong double-digits with growth in all regions and a significantly good performance in Brazil, Mexico and the USA.

While the second half of the year benefitted from a good summer with some easing of operating constraints including in the European on-trade, the fourth-quarter reflects the impact of renewed restrictions in all regions, particularly in Europe with closure of the on-trade.

Cider volume declined in the high-teens to 4.6 million hectolitres due to pub closures in the UK and alcohol sales restrictions in South Africa.

Strongbow, on the other hand, grew double-digits in Mexico and Russia.

Altogether, Heineken’s direct-to-consumer platforms, Beerwulf, Six2Go and Drinkies tripled the number of orders from consumers in the year.

With profits plunging to new lows, the Dutch brewing company has now announced that it will cut 8,000 jobs as part of its efforts to restore its operating margins to pre-pandemic levels.

Heineken first announced that it would cut jobs at its head and regional offices in 2021 during its Q3 results last year.

Under CEO Dolf van den Brink’s EverGreen plan, the company says it will save €2 billion (about US$2.43 billion) over the three years to 2023.

Heineken expects the pandemic to continue to impact its business in the first-half of 2021 and market conditions to gradually improve in the second part of the year.

The company expects revenue, operating profit and operating profit margin to stay below the level of 2019.

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