Heineken doubles profit but anticipates headwinds

Due partly to strict cost control, Heineken more than doubled its operating profit in the first half of the year. Nevertheless, the Dutch beer giant warns that more expensive raw materials are starting to weigh on margins.

Savings pay off

Heineken sold almost 10 per cent more beer in the first six months of the year than in the same period last year, and net turnover even increased by 14.1 per cent to 9.97 billion euros. However, the recovery was not equally pronounced everywhere: the strongest growth was in North and South America (+16.7 per cent) and the Africa/Europe/Middle East zone (+16.8 per cent). In Asia, the volume even decreased by 1 per cent, as new waves and variants of the coronavirus led to renewed restrictions in several countries.

The spectacular increase in operating profit, which more than doubled to 1.62 billion euros, is striking. The brewer not only profited from the higher turnover but also made substantial cuts in marketing expenditure. At the end of last year, Heineken launched a new plan to increase productivity, which should result in structural savings of 2 billion euros by 2023. Half of those savings should be realised by the end of this year.

CEO Dolf van den Brink warns that the second half of the year will be a lot more challenging: “We see an increase in the cost of raw materials that will play tricks on us from the second half of 2021 and will also have a significant effect in 2022.” The annual forecast, therefore, remains unchanged – despite the strong increase in profits.