Heineken – A Mixed Geographic Picture

0
Heineken – A Mixed Geographic Picture
Free-Photos / Pixabay

Heineken N.V. (AMS:HEIA) (OTCMKTS:HEINY)’s first half net revenue rose 14.1% organically to €10.0bn, driven by an 8.2% increase in total volumes and a 5.5% increase in revenue per hectolitre. Consolidated beer volume rose 9.6%. Underlying operating profit rose 109.3% to €1.6bn as the group recovered after a difficult first half in 2020. Compared to 2019 operating profit is still down 9%.

Get Our Activist Investing Case Study!

Get the entire 10-part series on our in-depth study on activist investing in PDF. Save it to your desktop, read it on your tablet, or print it out to read anywhere! Sign up below!

Q2 2021 hedge fund letters, conferences and more

Carlson Capital’s Double Black Diamond Adds 3.3% In August

Screenshot 2021 09 18 09.22.32Clint Carlson's Carlson Capital Double Black Diamond fund returned 3.34% in August net of fees. Following this performance, the fund is up 8.82% year-to-date net, according to a copy of the firm's August investor update, which ValueWalk has been able to review. On a gross basis, the Double Black Diamond fund added 4.55% in August Read More

Heineken expects costs to increase in the second half of 2021 and in 2022, partly due to increased commodity prices. Management plans to be “assertive on pricing” to meet this challenge, but expects a lower operating profit margin the second half and results will remain behind 2019.

Heineken is restoring the interim dividend at €0.28 per share.

The shares were broadly flat following the announcement.

Heineken's Regional Picture Looks Mixed

William Ryder, equity analyst at Hargreaves Lansdown:

“The recovery is getting underway at Heineken, and most of the numbers look much merrier than they did in 2020 when Covid first struck. However, the regional picture is more mixed, and it really depends how the timing of the various Covid waves has worked out. Some countries, like the UK, are pretty much back to normal – even if only recently. Other regions like Asia Pacific have had a first half blighted by lockdowns. The overall direction of travel looks positive though, and if the current wave stays under control in the UK it will augur well for other countries who may be a few steps behind.

Heineken did sound a word of caution on margins and cost inflation. This is starting to become a pattern across a few industries, although it’s still not clear how much is temporary Covid disruption and how much is genuine underlying inflation. Either way, Heineken is adopting an “assertive” pricing strategy, but nonetheless expects margins to come under pressure. This is something to watch, and in an inflationary environment brand strength will be more important than ever.

Heineken also added called out the driver shortage here in the UK. This is undoubtedly disruptive for the group, but in our view it should sort itself out over time. There’s no fundamental, long term shortage of drivers in this country, it will just take some time for the market to adjust and new drivers to get qualified, and compensation may need to rise to attract new hires. We don’t think this will be a long term source of problems for Heineken.”


About Hargreaves Lansdown

Over 1.6 million clients trust us with £132.9 billion (as at 30 April 2021), making us the UK’s largest digital wealth management service. More than 98% of client activity is done through our digital channels and over 600,000 access our mobile app each month.

Updated on

Previous article Literal Pure White Image Made NFT Sells For $4.8 Million At Auction
Next article ACR 2Q21 Commentary: Inflation, Markets And Returns
Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver

No posts to display