NETHERLANS – Dutch multinational brewer, Heineken has reported a 16.4% decline in net revenue to €9.243 billion (US$10.8b) in its first half of 2020, driven by a 13.4% decline in total consolidated volume as the Covid-19 pandemic took a toll on its on-trade business.
Its 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.
Beer volume was most affected in the Americas, Africa, the Middle East and Eastern Europe. These regions saw “a decline in the mid-teens”, driven by full lockdowns in Mexico and South Africa.
Western Europe experienced “a high-single digit decline”, while Asia Pacific showed the highest resilience thanks largely to strong sales in Vietnam.
In Europe, off-trade beer volume grew in “the mid-teens” and market share increased. However, Heineken is heavily exposed to the on-trade, so its operating profits took a battering.
“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 costs,” said Dolf van den Brink, CEO and chairman of Heineken.
Operating profit decreased 52.5% for the six months to June 30, while net income plummeted 75.8% to €227 million (US$226.3m) after it took a €548 million (US$643m) of impairments, predominantly for its operations in Papua New Guinea and Jamaica, reports Foodbev.
It also said that production costs per hectolitre increased significantly with the combined negative impact of channel and product mix and transactional currency effects.
“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,” stated Dolf.
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