Heineken saw a 52.5% decline in first-half operating profit after the coronavirus pandemic took its toll on the group’s on-trade business.
In an unscheduled update ahead of full interim results next month, the world’s second-largest brewer revealed that net revenue had declined by 16.4% on an organic basis in the six month period to 30 June. This was driven by an organic decline of 13.4% in total consolidated volume and an organic decline of 3.6% in net revenue per hectoliter.
Beer volume dropped by 11.5% with the Americas and Africa, Middle East and Eastern Europe regions most affected, with a decline in the mid-teens. This was followed by Europe with a high-single digit decline, whilst Asia Pacific showed some resilience driven by Vietnam.
The group said the impact of the crisis deepened in the second quarter. However, after a low point in April, Heineken’s volume started to gradually recover into June as lockdowns were lifted around the world and trade customers restored depleted inventories.
As well as the operating profit fall, Heineken’s net profit plummeted 76%. However, including an exceptional impairment charge of €550m, the group expects to post a reported net loss of around €300m – down from a net profit of €1bn a year earlier.
Whilst it benefitted from beer volumes growing in the ‘mid-teens’ in the off-trade, Heineken highlighted that its profit was “disproportionately” affected by restaurant and bars closures during the crisis.
It also said that production costs per hectolitre increased significantly with the combined negative impact of channel and product mix and transactional currency effects.
“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,” the group said.
“Despite these short-term challenges, Heineken remains confident in its ability to navigate the crisis while continuing to build a bright future.”
Heineken stated that it provide more information when it unveils its audited half-year results on 3 August.
Last week, rival brewer Carlsberg said it had seen a smaller than forecast drop in first-half operating profit after its key Chinese market rebounded strongly during the second quarter and trade in Western Europe also improved.