Heineken took major steps in 2021. CEO Dolf van den Brink announced a year ago that the group would implement €2 billion in cost savings and that 8,000 jobs would be cut, about 10% of the total. In the meantime, € 1.3 billion has been realized, Heineken says.
Net sales increased by 12.2% to €21.9 billion. Measured in hectoliters of beer, production grew by 8.3%. Total volume growth was 17.4%, operating profit increased by 43.8%. In 2020 it had shrunk by 49.4%. Below the line, a net amount of €2.04 billion remained. Underlying earnings per share were €3.54. A significant improvement from 2020, when underlying earnings per share came in at $2.00 and the company lost $200 million.
Beer breweries worldwide are severely affected by high barley and malt prices, transport, energy and personnel costs and especially packaging costs (aluminium and glass). These components make up about 60% of the price of beer. On February 4, Carlsberg therefore already reported that customers should take price increases of 10 to 12% into account. Heineken also says it has implemented price increases, especially in Mexico, Brazil, Nigeria and Europe.
CEO Dolf van den Brink calls 2021 a year with ‘strong results’ despite ‘challenging and rapidly changing circumstances.’
Strikes
In recent months it has been restless at the breweries in Zoeterwoude and Den Bosch, just like at Vrumona’s soft drink factory in Bunnik. Employees left the job because they wanted more raises than Heineken offered.
Heineken recently acquired a majority stake in South African cider and spirits producer and distributor, Distell, after months of talks. It merged its own South African operations with those of Distell and the smaller Namibian Breweries into a new company, in which Heineken owns approximately two-thirds of the shares.
Analysts expect the transaction in South Africa to deliver around 6% revenue growth, based on 2019 figures.
Heineken’s third quarter figures were another major setback.
Price increases
The half-year figures were again better than expected. However, the top warned about price increases.
Heineken has about 250 brands that it sells in 170 countries. It is the second brewer in the world, after merger juggernaut AB Inbev, and ahead of the Danish Carlsberg. Heineken derives some 33% of its turnover from Asia and Australia, 17% from Western Europe, 40% from the Americas and 10% from the Middle East, Africa and Eastern Europe.
Much beer for the American market is export beer, as a result of which the group has to deal with significantly higher transport costs in shipping.
Analysts at ING previously expected that Heineken would not be back to the pre-corona sales and profit level of 2019 until 2024.
At the beginning of 2021, there was still €50 million in arrears in rent payments from pubs.
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