Heineken claims COVID-19 effects remain ‘volatile’ and ‘uncertain’

By Michelle Perrett

- Last updated on GMT

Heineken has been impacted by the Coronavirus
Heineken has been impacted by the Coronavirus

Related tags: Drinks

Heineken claims the COVID-19 pandemic constitutes a “major negative macroeconomic development” that is having a “significant impact” on its markets and business in 2020.

The global brewer said it had observed a gradual recovery since April across most markets but the situation continued to be “volatile and uncertain”.

It said “significant uncertainty”​ remained about the impact of the COVID-19 pandemic, including risks related to containment measures, supply chain continuity, cyber-security incidents and the general macroeconomic downturn.

However, to provide employee security it has committed to avoiding structural lay-offs triggered by the pandemic in 2020. 

Heineken also revealed that it had continued to pay all suppliers on time and had also provided advanced payments to suppliers who were heavily impacted by COVID-19.

On-trade impact 

It said that the on-trade in Europe remained more affected than the off-trade and product and channel mix were expected to continue to “adversely impact results”.

“As a consequence, input costs per hectolitre are expected to continue to be significantly higher than last year,”​ it said.

Heineken claimed it was impacted as countries took far-reaching measures to mitigate the spread of COVID-19 including restricted movement of populations, outlet closures and mandatory lockdown of production facilities. 

Heineken said areas in Europe where it ran a vertically integrated business model, including wholesale in several markets as well as pubs in the UK, had been particularly badly hit.

Beer volume decline

In the half-year to 30 June, consolidated beer volume for the brewer had declined by 11.5% organically, it reported. The impact of the COVID-19 crisis deepened in its second quarter when beer volume declined 19.4%. 

Net profit ​decreased by 75.8% organically to €227m (2019: €1,054 million) over the first six months of 2020. 

Net revenue ​declined 16.4% organically driven by a 13.4% decline in total consolidated volume and a 3.6% decline in net revenue per hectolitre. 

Dolf van den Brink, chief executive officer and chairman of the executive board at Heineken said 2020 had been defined by “unprecedented challenges.”

“Our bottom-line was disproportionately impacted due to the decline in the European on-trade, as well as temporary Government restrictions on our activities in Mexico and South Africa. We have taken mitigating actions and will further intensify our focus on costs.” 

 

 

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