World: Heineken’s first-half results beat analysts’ expectations

Heineken, the world’s second-largest brewer by sales, beat analysts’ expectations in the first half as it reported a rise in revenues and earnings in all of its four global markets in 2017, the Financial Times said on July 31.

The Dutch brewer of brands including Tiger and Amstel beers on July 31 reported a 5.7 per cent year-on-year increase in organic revenues to €10.47 bln in the six months to the end of June. That eclipsed forecasts of a 4.1 per cent uplift.

Operating profits at the group also exceeded analysts’ expectations, rising 11.8 per cent year on year to €1.8 bln compared with an average forecast of a 4.8 per cent increase.

Having warned of tough market conditions and unfavourable currency movements earlier in the year, Heineken said it expected to post another year of revenue and profit growth in 2017-18. The group said it had had a strong second quarter, notching up rising sales in Europe, the Americas, Asia Pacific and Africa and the Middle East.

A later Easter and a bout of warm European weather helped overall volumes grow 4.2 per cent in the three months ending in June. The performance helped drive half-year volumes up 2.6 per cent to 101.3m hectolitres.

Jean-François van Boxmeer, Heineken’s chief executive, said: “Whilst economic conditions are likely to remain volatile, our expectations for the full year are unchanged.”

The group suffered an estimated €155 mln hit to operating profits from global currency movements and a €60 mln blow to net profits in the period. It still expects margins to edge up 40 basis points for the year as a whole.

In May, Heineken completed a ¥77 bln ($700 mln) acquisition of the Brazilian beer business of Kirin, the Japanese brewer. It is also waiting on final clearance from UK regulators over the planned £403 mln purchase of Punch Taverns.

Heineken has offered to sell dozens of pubs in the Punch estate to win approval from the Competition and Markets Authority after the deal was announced in December. A decision on whether to escalate the investigation or approve the deal is due by August 22.

The Dutch brewer said its estimated margin improvement did not include any impact from the Kirin deal, the Punch acquisition or an agreement to buy up its remaining stake in Californian craft brewer Lagunitas, which also completed in May.

“Heineken benefits from a broad portfolio of brands, a well-diversified geographic footprint, and a strong management team,” said Robert Waldschmidt analyst at Liberum, who is targetting a share price of €100.

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