Heineken N.V. reports 2022 half year results
Amsterdam, 1 August 2022 – Heineken N.V. (EURONEXT: HEIA; OTCQX:
HEINY) announces:
- Revenue growth
37.0%
- Net revenue (beia)
24.3% organic growth; per hectolitre 15.6%
- Beer volume organic
growth 7.6%; premium beer volume 10.2% organically
- Heineken® volume
13.8% growth
- Operating profit
growth 20.6%; operating profit (beia) organic growth 24.6%
- Net profit growth
22.3%; net profit (beia) organic growth 40.2%
- Diluted EPS €2.20;
diluted EPS (beia) €2.30
- Full year 2022
expectations unchanged. 2023 guidance revised
Dolf van den Brink, CEO and Chairman of the Executive
Board, commented:
"We are encouraged by the results for the first half of the
year. We benefitted from the recovery in Asia Pacific and the
on-trade in Europe as consumers returned to the bars, with demand
resilient until now despite mounting inflationary pressures on
consumers' disposable income.
Our business performed well in the first half of 2022. We grew
ahead of the industry in more than half of our markets and the
Heineken® brand again showed strong momentum, boosted by stepped up
brand support. Our actions on pricing, revenue management and
productivity offset significant inflationary pressures in our cost
base. As a result, operating profit is now firmly ahead of
2019.
We continue to face an uncertain outlook for consumers and
businesses alike. Remaining vigilant, we are fully committed to
drive our EverGreen transformation for sustained, long-term value
creation. In terms of outlook, we reiterate our 2022 goals. For
2023, we move from an operating margin objective towards delivering
operating profit (beia) organic growth. Our medium-term aspiration
remains to deliver superior, balanced growth with operating
leverage over time."
IFRS Measures |
€ million |
|
Total growth |
|
BEIA Measures |
€ million |
Organic growth2 |
Revenue |
16,401 |
|
37.0% |
|
Revenue
(beia) |
16,401 |
22.4% |
Net revenue |
13,485 |
|
34.7% |
|
Net
revenue (beia) |
13,485 |
24.3% |
Operating profit |
2,070 |
|
20.6% |
|
Operating
profit (beia) |
2,155 |
24.6% |
|
|
|
|
|
Operating
profit (beia) margin |
16.0% |
|
Net profit |
1,265 |
|
22.3% |
|
Net profit
(beia) |
1,326 |
40.2% |
Diluted EPS (in €) |
2.20 |
|
22.2% |
|
Diluted
EPS (beia) (in €) |
2.30 |
48.0% |
|
|
Free
operating cash flow |
1,122 |
|
|
Net debt / EBITDA (beia)3 |
2.4x |
|
1 Consolidated figures are used throughout this report unless
otherwise stated; please refer to the Glossary for an explanation
of non-GAAP measures and other terms used throughout this report. 2
Organic growth shown, except for Diluted EPS (beia), which is total
growth. 3 Includes acquisitions and excludes disposals on a 12
month pro-forma basis.
SUPERIOR TOP-LINE GROWTH
Our ambition is to deliver superior growth with a good balance
between volume- and value-driven revenue expansion, positioning us
among the fastest growing global beverage companies. We aim to
achieve this by sharp consumer and customer orientation, leveraging
our leading premium brands, developing winning consumer
propositions in fast-growing segments and continuously shaping our
geographic and portfolio footprint.
Revenue for the first half of 2022 was 16,401
million (2021: 11,970 million). Net revenue (beia)
increased 24.3% organically, driven by a 7.7% increase in total
consolidated volume and a 15.6% increase in net revenue (beia) per
hectolitre. The underlying price-mix on a constant geographic basis
was up 15.3%, driven by pricing across all markets, covering input
cost inflation on a euro-for-euro basis, a positive channel mix and
premiumisation. Compared to 2019, total consolidated volume
increased organically by 0.8% and net revenue (beia) is 14.4%
ahead, excluding consolidation changes, driven by post-COVID volume
recovery, growth of our premium brands and the impact of
inflation-led pricing.
Beer volume increased 7.6% organically versus
last year and came 4.2% ahead of 2019 on an organic basis. The
growth was faster in the second quarter as beer volume grew 9.7%,
led by strong growth in the Americas, the continued recovery of
Asia Pacific and the on-trade in Europe and modest growth in the
Africa, Middle East and Eastern Europe (AMEE) region. We gained or
held market share in more than half of our markets.
Beer
volume |
2Q22 |
|
2Q21 |
|
Organicgrowth |
|
HY22 |
|
HY21 |
|
Organicgrowth |
(in mhl) |
|
|
|
|
|
Heineken
N.V. |
70.4 |
|
59.6 |
|
9.7% |
|
126.9 |
|
109.9 |
|
7.6% |
Africa Middle East & Eastern Europe |
9.8 |
|
9.7 |
|
1.4% |
|
19.6 |
|
19.1 |
|
3.5% |
Americas |
23.1 |
|
20.9 |
|
10.7% |
|
42.8 |
|
40.3 |
|
6.2% |
Asia Pacific |
13.1 |
|
5.9 |
|
35.7% |
|
24.6 |
|
13.6 |
|
17.0% |
Europe |
24.4 |
|
23.1 |
|
5.7% |
|
39.9 |
|
36.9 |
|
7.9% |
Driving premiumisation at scale, led by
Heineken®
Premium beer volume grew by 10.2%, driving
close to half of our organic growth in beer volume, led by
Heineken®.
Heineken® continued its strong
performance and grew volume by 14.6% in the second quarter to close
the first half with a 13.8% increase, up 32.9% versus 2019. The
brand grew double-digits in more than 50 markets, notably in
Brazil, China, Vietnam, South Africa, the Netherlands, Spain,
Italy, Laos and the United Arab Emirates.
Heineken®
Silver, now present in 22 markets, has nearly
doubled its volume, driven by strong growth in Vietnam and China
and its rollout across Europe and Asia. As the next step of its
global roll-out, we introduced Heineken® Silver in Mexico this
month.
As per the Kantar BrandZ 2022 global survey,
Heineken® was the fastest growing
in 'Brand Value' among top alcohol brands, driven by its strong
growth momentum, innovations and creativity. The latter was further
recognised at this year's Cannes Lions, the prestigious Festival of
Creativity, as the most awarded alcohol brand. The brand's most
recent campaign, "The Closer", aims to spark conversation on
work-life imbalance, with a smile.
Heineken® supports inclusion in
the bar and on the football field and is a proud sponsor of the
UEFA Women's EURO football tournament.
Heineken® volume |
|
2Q22 |
|
Organicgrowth |
|
HY22 |
|
Organicgrowth |
(in mhl) |
|
|
|
|
Total |
|
14.0 |
|
14.6% |
|
25.9 |
|
13.8% |
Africa Middle East & Eastern Europe |
|
1.4 |
|
0.6% |
|
3.2 |
|
6.6% |
Americas |
|
5.4 |
|
23.1% |
|
10.3 |
|
17.4% |
Asia Pacific |
|
2.1 |
|
28.1% |
|
4.1 |
|
20.6% |
Europe |
|
5.1 |
|
6.4% |
|
8.3 |
|
9.4% |
Amstel volume grew in the high-twenties,
bringing a taste of Amsterdam to the world. More than 20 markets
grew double-digits, with especially strong results in Brazil, South
Africa, Spain, the UK, the Netherlands, Mexico, Argentina, India
and China. Amstel Ultra continued its expansion in the Americas to
reach 12 markets. Birra Moretti continued to share
the true taste of Italy across Europe and grew volume in the
mid-twenties. All European markets contributed to the growth with
particularly strong momentum in the UK, Ireland, the Netherlands,
Romania and Switzerland. Sol grew volume by a
low-single-digit, led by strong growth in Brazil, Chile and South
Africa, partially offset by declines in Mexico and Europe. In the
year of the Tiger, we are uncaging the growth of
our brand in Vietnam and beyond. The brand volume grew in the
mid-teens, driven by the recovery in the second quarter of Vietnam,
Cambodia, and Malaysia, a continued strong performance in Nigeria
and the launch in Brazil last year. Tiger Crystal is now introduced
in 19 markets. Edelweiss grew volume in the
sixties, bringing a taste of the Alps to Asia, reaching 7 markets
and we have started a local production hub in Vietnam.
Lagunitas volume grew by a low-single-digit as
double-digit growth in Europe was partially offset by a decline in
the USA. The non-alcoholic line extensions of Lagunitas, IPNA and
Hoppy Refresher, continue their momentum and grew volume in the
high-teens.
Pioneer choice in low & no-alcohol
(LONO)
Our LONO portfolio grew volume by a
low-single-digit, with double-digit growth in more than 20 markets,
most noticeably Brazil, Mexico, Spain, Germany, Panama and
Ethiopia, partially offset by declines in Poland, Russia and
Egypt.
The non-alcoholic beer and cider portfolio grew
volume by a high-single-digit, led by
Heineken® 0.0.
Despite stopping sales in Russia,
Heineken® 0.0
grew in the low-teens, with a particularly strong performance in
Brazil and Spain.
We are in the process of extending our industry-leading LONO
portfolio to serve the needs of consumers looking for adult
refreshment with lower or no-alcohol content and a great taste.
Intentionally expand beyond beer
We see plenty of opportunities to expand our product portfolio
beyond beer to better meet the needs of more
consumers. Overall, our portfolio of flavoured alcoholic beverages
(FABs), including ciders and hard seltzers, grew volume by a
high-single-digit to 6.4 million hectolitres and is ahead of 2019
in the low-teens.
Desperados continued its momentum, particularly
in its core European markets and more than doubling its volume in
Nigeria. For consumers looking for a trendy alternative to beer at
a similar alcohol level, we launched Desperados Alcoholic Sparkling
Water with Tequila in the Netherlands in May.
Cider was back to growth in the UK and Ireland
and saw double-digit growth in South Africa, Vietnam, Spain and
Portugal. For consumers who desire a more balanced lifestyle, we
launched Strongbow Ultra Dark Fruit in the UK, a low-calorie cider
that does not compromise great taste.
We are learning from our experiments across markets and continue
to introduce new propositions. We are increasingly leveraging our
strongest brands for these propositions, next to new brands like
Pure Piraña. For example, we launched Dos Equis Classic Lime
Margarita and Disorderly Tea House in the USA.
Building a future-fit digital
route-to-consumer
Our ambition is to be the best-connected brewer, so we have been
stepping up our investments behind our digital transformation to
build a future-ready HEINEKEN, especially strengthening our digital
route-to-consumer:
- Our business-to-business (B2B) digital
platforms continued to develop at pace. We captured €2.8
billion in digital sales value in the first half of this year,
close to 3x the same period last year and to the entire value
captured in 2021, with close to 430 thousand active customers in
fragmented, traditional channels. The digitisation of customer
relationships enables us to provide better services, leverage data
insights, and capture meaningful increases in efficiency. For
example, in Italy we have realised the equivalent of an extra day
of sales visits per sales representative, whilst in Ethiopia we
have seen an over threefold increase in weekly outlet engagements
to optimise assortment and product availability. The remarkable
growth in digital sales value was balanced across both our direct
and indirect distribution markets, notably Nigeria, Vietnam,
Mexico, Brazil and Europe. Vietnam observed the fastest growth,
more than 6x last year, covering now close to 55% of the fragmented
trade.
- The net revenue of Beerwulf, our digital
direct-to-consumer (eD2C) platform in Europe, was more than 50%
ahead of pre-pandemic levels, despite the shift in consumption from
in-home to the on-trade as it reopened. Our active consumer base
for our home draught systems is close to 40% ahead of pre-pandemic
levels, and the transaction data we collect provides valuable
insights.
- Our eD2C platform in Mexico GLUP is growing
fast with very positive feedback from users on its value
proposition of delivering orders in less than 60 minutes and its
use of brand assets. The platform was launched in Monterrey last
year, and we are expanding into other large cities in the
country.
Strengthen and optimise our footprint
We continuously review how we can further strengthen our
portfolio and geographical footprint and enhance our long-term,
sustained growth advantage.
At the end of 2021, HEINEKEN announced its proposed transaction
with Distell Group Holdings Limited (‘Distell’) and Namibia
Breweries Limited (‘NBL’). We continue in the process of obtaining
regulatory approvals to complete the transaction and expect to
close it in the second half of 2022.
On 28 March, HEINEKEN announced its decision to leave Russia. We
are making good progress to secure an orderly transfer of our
business to a new owner in full compliance with international and
local laws and expect to reach an agreement during the second half
of this year. For more details on the financial implications of
this decision, please refer to page 12.
FUNDING THE GROWTH
Given the current inflationary environment, we are taking
significant pricing and revenue management actions to offset the
input and other cost inflation on a euro-for-euro basis. In
addition, we are structurally addressing our cost base and building
a cost-conscious culture to mitigate cost pressures, to invest
behind our growth and gear our business to deliver operating
leverage over time.
We continue to make significant progress in our
productivity programme, targeting €2 billion of
structural gross savings by 2023, relative to our cost base of
2019. We have now collected more than 9,000 ideas through our
systematic process, some going beyond 2023. We are working on
embedding this process further so ideas can travel across the
organisation to learn, share and reapply. Some of these ideas
require significant change and are packaged into transformational
programmes. By the end of 2022, we expect to have captured €1.7
billion of these savings, well on track to deliver on our
objective.
The progress in the delivery of these savings has helped us to
accelerate investments behind our growth agenda, digital
transformation and sustainability initiatives. In addition, we are
reversing the significant cost mitigation actions
taken to partially offset the financial impact of lockdowns and
other restrictions on operating during the pandemic. Last year the
full cost mitigation actions represented a reduction of expenses
(beia) of circa €0.5 billion for the full year relative to 2019.
For example, marketing and sales expenses (beia) in the first half
of the year increased organically by €264 million or 28.5%,
bringing the absolute level close to pre-pandemic levels.
Operating profit increased to €2,070 million.
Operating profit (beia) increased 24.6%
organically, driven by the volume recovery, pricing and revenue
management actions and continued strong delivery of gross savings
from our productivity programme, more than offsetting significant
inflationary pressures, the reversal of our cost mitigation actions
and a step-up in investments. All in all, operating profit (beia)
is 21.6% ahead of 2019, excluding consolidation effects.
Operating profit margin (beia) declined to 16.0%,
35 bps below the first half of 2021, driven by consolidation
changes; excluding those, operating profit margin would have
remained stable.
Net profit increased to €1,265 million.
Net profit (beia) increased 40.2% organically,
driven by the growth in operating profit, lower interest and net
financing expenses, and the normalisation of the effective tax
rate.
RAISING THE BAR ON SUSTAINABILITY AND
RESPONSIBILITY
We are making steady progress against our Brew a Better World
strategy, focusing on three areas: raising the bar on climate
action, accelerating our social sustainability agenda and driving
our brands to advance the moderate consumption of alcohol.
Environmental: Path to zero impact
Along our journey to become net zero in our entire value chain
by 2040, roadmaps have been developed with our largest operating
companies, which account for 75% of our total emissions. In South
Africa, we launched the largest solar plant in the African beer
industry, reducing the brewery’s carbon impact by 30%.
Regarding healthy watersheds, two new wastewater treatment
plants were installed at our breweries in Serbia and Haiti. Meoqui
in Mexico is our most water efficient brewery, using less than 2
litres of water for one litre of beer.
Social: Path to an inclusive, fair and equitable
world
Currently, 26% of our senior managers are women and we aim to
increase this to at least 30% by 2025 and 40% by 2030 on the path
to gender balance.
The Heineken® brand revealed a new direction for its sponsorship
in football, making its entire football campaign across both the
men's and women's games about tackling gender bias affecting both
players and fans of the sport.
Responsible: Path to moderate and no harmful
use
Heineken® 0.0 is being introduced on draught in hundreds of pubs
across the country in the UK. Through a partnership with ITV, it is
now part of the UK’s two largest television soap series helping to
normalise the consumption of non-alcoholic beer.
We also launched a new episode of our ‘When You Drive, Never
Drink’ campaign, addressing the issue of overconfidence when
drinking alcohol, with the help of F1 drivers Daniel Ricciardo and
Sergio Perez.
Governance
We have aligned our long-term incentive (LTI) policy with our
sustainability ambitions by including three Brew a Better World
metrics representing 25% of the total LTI: carbon emissions
reduction in production, water efficiency worldwide and the
percentage of women at the senior manager level.
Our multi-year EverGreen strategy aims to deliver superior,
balanced growth for sustainable, long-term value creation. We are
encouraged by the speed and progress made so far on our key
strategic programmes, and by the strong post-COVID recovery of our
business.
At the same time, we continue to observe a challenging global
environment and an uncertain economic outlook. Whilst consumer
demand in aggregate has been resilient in the first half, there is
increasing risk that mounting pressure on consumer purchasing power
will affect beer consumption.
We expect significant inflationary pressures on our cost base
and ongoing investment in our business to continue and impact the
second half of 2022 and into 2023. The recent softening in some
commodities is being offset by the unprecedented price levels and
availability risk of natural gas, most notably affecting Europe,
our biggest region. Our pricing and revenue management actions have
effectively offset these inflationary pressures so far in absolute
terms, and we remain committed to continuing to do so. In addition,
our productivity programme continues at pace, lifting the aggregate
gross savings contribution to €1.7 billion by end of 2022 compared
to the cost base of 2019. This will continue to offset cost
pressures and enable increased investments in brand support, our
digital transformation and sustainability initiatives.
For 2022, we keep our outlook unchanged and expect a stable to
modest sequential improvement in operating profit margin (beia)
versus last year. We are changing our previous guidance for 2023.
We will move from an operating profit margin objective towards
delivering operating profit (beia) organic growth, in the range of
a mid- to high-single digit, excluding any major unforeseen
macroeconomic and political developments. Over the medium term, we
reconfirm our aspiration to deliver superior, balanced growth with
operating leverage over time.
|
Translational Calculated Currency Impact |
Based on the impact to date, and applying spot rates of 28 July
2022 to the 2021 financial results as a baseline for the remainder
of the year, the calculated positive currency translational impact
would be approximately €1.5 billion in net revenue (beia), €210
million at consolidated operating profit (beia), and €140 million
at net profit (beia).
HEINEKEN's dividends are paid in the form of an interim dividend
and a final dividend. The interim dividend is fixed at 40% of the
total dividend of the previous year. As a result, an interim
dividend of €0.50 per share (2021: €0.28) will be paid on 11 August
2022. The shares will trade ex-dividend on 3 August 2022.
Media |
|
Investors |
Sarah
Backhouse |
|
José Federico Castillo
Martinez |
Director of Global
Communication |
|
Investor Relations
Director |
Michael
Fuchs |
|
Mark Matthews / Robin
Achten |
Global Corporate and Financial
Communications Manager |
|
Investor Relations Manager /
Senior Analyst |
E-mail:
pressoffice@heineken.com |
|
E-mail:
investors@heineken.com |
Tel: +31-20-5239355 |
|
Tel: +31-20-5239590 |
|
Investor Calendar Heineken N.V. |
Trading Update for Q3 2022 |
|
26 October 2022 |
Capital Markets Event in
Amsterdam |
|
1-2 December 2022 |
Full Year 2022 Results |
|
15 February 2023 |
HEINEKEN will host an analyst and investor conference call in
relation to its 2022 Half Year results today at 14:00 CET/ 13:00
GMT. The call will be audio cast live via the company’s website:
www.theheinekencompany.com. An audio replay service will also be
made available after the conference call at the above web address.
Analysts and investors can dial-in using the following telephone
numbers:
United Kingdom (Local): 020 3936 2999
Netherlands (Local): 085 888 7233
USA: 1 646 664 1960
All other locations: +44 203 936 2999
Participation password for all countries: 810785
Editorial information:HEINEKEN is the world's most international
brewer. It is the leading developer and marketer of premium and
non-alcoholic beer and cider brands. Led by the Heineken® brand,
the Group has a portfolio of more than 300 international, regional,
local and specialty beers and ciders. With HEINEKEN’s over 85,000
employees, we brew the joy of true togetherness to inspire a better
world. Our dream is to shape the future of beer and beyond to win
the hearts of consumers. We are committed to innovation, long-term
brand investment, disciplined sales execution and focused cost
management. Through "Brew a Better World", sustainability is
embedded in the business. HEINEKEN has a well-balanced geographic
footprint with leadership positions in both developed and
developing markets. We operate breweries, malteries, cider plants
and other production facilities in more than 70 countries. Most
recent information is available on our Company's website and follow
us on LinkedIn, Twitter and Instagram.
Market Abuse RegulationThis press release contains
price-sensitive information within the meaning of Article 7(1) of
the EU Market Abuse Regulation.
Disclaimer: This press release contains forward-looking
statements with regard to the financial position and results of
HEINEKEN’s activities. These forward-looking statements are subject
to risks and uncertainties that could cause actual results to
differ materially from those expressed in the forward-looking
statements. Many of these risks and uncertainties relate to factors
that are beyond HEINEKEN’s ability to control or estimate
precisely, such as future market and economic conditions,
developments in the ongoing COVID-19 pandemic and related
government measures, the behaviour of other market participants,
changes in consumer preferences, the ability to successfully
integrate acquired businesses and achieve anticipated synergies,
costs of raw materials, interest-rate and exchange-rate
fluctuations, changes in tax rates, changes in law, change in
pension costs, the actions of government regulators and weather
conditions. These and other risk factors are detailed in HEINEKEN’s
publicly filed annual reports. You are cautioned not to place undue
reliance on these forward-looking statements, which speak only of
the date of this press release. HEINEKEN does not undertake any
obligation to update these forward-looking statements contained in
this press release. Market share estimates contained in this press
release are based on outside sources, such as specialised research
institutes, in combination with management estimates.
- Click here for the full press release: Heineken NV 2022 Half
Year results press release (01 August 2022)
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