FDBusiness.com

Heineken has reported organic growth in volume, revenue and operating profit for the first half of 2017, with all four of its business regions contributing positively. Revenue rose 5.7% organically to €10.47 billion, with a 2.3% increase in total volume and a 3.4% increase in revenue per hectolitre. Revenue per hectolitre was up organically for the first half across all regions apart from Asia Pacific due to adverse brand mix. Operating profit (beia) grew 11.8% organically to €1.8 billion, reflecting a mix of higher revenue, premiumisation and cost efficiencies.

Heineken brand volume grew 3.9%, with positive momentum in all regions apart from Asia Pacific where lower volume in China and Vietnam weighed negatively. Europe and the Americas were the main drivers of Heineken growth. The brand grew double digit in Brazil, South Africa, Russia, Italy, Mexico, South Korea, Canada, Romania and Hungary. There was also strong brand growth in France, the Netherlands and in Argentina. Heineken continued to benefit from leveraging global platforms such as UEFA Champions League, the Cities, Music and Product Stories campaigns, and the Global partnership with Formula 1® which started last year.

The international brand portfolio, which includes brands complementary to Heineken and that have high potential to travel across geographies, outperformed. Volume was up double digit for Affligem, Tiger, Krušovice, Tecate and Red Stripe, and up high single digit for Desperados. Sol Premium volume was up low single digit. Amstel volume declined low single digit due to weaker volume in Nigeria and Greece, however the brand grew strongly in markets such as Brazil.

Cider volume increased organically low single digit to reach 2.3 million hectolitres (up from 2.2 million in the corresponding period of 2016). Growth was particularly strong in South Africa following the successful Strongbow launch at the end of 2016, as well as in Vietnam, Ireland and in the Netherlands. Excluding the UK, where volume decline was partly due to delisting by a modern trade retailer, cider volume increased double digit.

Innovation is firmly embedded in Heineken’s company strategy. The no-alcohol Heineken® 0.0 was launched in the second quarter in 16 markets. Overall in Europe, there was double digit growth for low and no alcohol volume, including strong performance in Spain, Netherlands, Poland and Austria. Total low and no alcohol volume was 6.1 million hectolitres slightly down from 6.2 million last year due to weakness in malt products in Nigeria and Egypt. In craft and variety Lagunitas, Mort Subite, Moretti Regionali and Zywiec variants continued to perform particularly well.

Jean-François van Boxmeer, chief executive and chairman of Heineken, comments: “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.”

Heineken expects further organic revenue and profit growth in the second half. Including the impact of acquisitions, the global brewer anticipates a year on year improvement in operating profit (beia) margin of around 40bps. Capital expenditure related to property, plant and equipment should be slightly below €2 billion (2016: €1.8 billion).