H1 2020: Heineken discloses preliminary highlights, sets for loss as it cuts value of assets by €550m

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Heineken N.V. recently issued the following statement.

In the first half of 2020, HEINEKEN’s markets and businesses were significantly impacted by the COVID-19 pandemic, with unprecedented volatility and uncertainty leading to the withdrawal of guidance for 2020 on 8 April.

Despite these short-term challenges, HEINEKEN remains confident in its ability to navigate the crisis while continuing to build a bright future.

H1 2020: Heineken discloses preliminary highlights, sets for loss as it cuts value of assets by €550m - Brand Spur
Photo by Jinen Shah on Unsplash

In this context, HEINEKEN has decided to disclose preliminary highlights of its 2020 half-year results ahead of the scheduled publication date. The final results will be published as planned on 3 August 2020.

All figures mentioned below are preliminary, unaudited and may be subject to adjustments from customary reviews.

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Based on preliminary figures, first-half net revenue (beia) declined by 16.4% on an organic basis. This is driven by an organic decline of 13.4% in total consolidated volume and an organic decline of 3.6% in net revenue (beia) per hectoliter. Beer volume declined organically by 11.5%.

As expected, the impact of the COVID-19 crisis deepened in the second quarter of 2020. 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 and Africa, Middle East and Eastern Europe regions with a decline in the mid-teens due to full lockdowns in Mexico and South Africa, followed by Europe with a high-single-digit decline, whilst the Asia Pacific showed the highest resilience driven by Vietnam.

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The Heineken® brand performed well in relative terms with a 2.5% decline. The brand grew double digits in 14 markets, including Brazil, China, the UK, Poland, Germany, Ivory Coast and South Korea. Heineken® 0.0 grew double digits with growth across all regions and with particular strength in the US and Mexico.

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Operating profit (beia) declined organically by 52.5%. Net profit (beia) declined by 75.8%, leading to a diluted EPS (beia) of € 0.39. Exceptional items will include around € 550 million of impairments on tangible and intangible assets, leading to a reported net loss of around € 300 million.

In Europe off-trade, beer volume grew in the mid-teens and market share increased in key markets. However, given HEINEKEN’s strong position in the on-trade and the structural differences between channels, operating profit was disproportionally affected as on-trade outlets were closed for a large part of the second quarter.

Input costs per hectoliter increased significantly with the combined negative impact of channel and product mix and transactional currency effects.

From late March onwards, HEINEKEN took significant cost mitigation actions leading to an overall decrease in costs for the first half of 2020. The company is committed to further intensify its focus on costs.

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HEINEKEN has entered the crisis with great brands, and a dedicated and talented workforce. The company has a strong balance sheet as well as undrawn committed credit facilities.

HEINEKEN will provide more information in its 2020 half-year results report on 3 August 2020.

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H1 2020: Heineken discloses preliminary highlights, sets for loss as it cuts value of assets by €550m - Brand SpurH1 2020: Heineken discloses preliminary highlights, sets for loss as it cuts value of assets by €550m - Brand Spur

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H1 2020: Heineken discloses preliminary highlights, sets for loss as it cuts value of assets by €550m - Brand SpurH1 2020: Heineken discloses preliminary highlights, sets for loss as it cuts value of assets by €550m - Brand Spur

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