Heineken cheers market with strong full-year results
Investors toasted Heineken on Wednesday, sending shares in the Dutch brewer 6% higher on forecast-beating results.
The world’s second-largest brewer said full-year net revenues were €22.5bn, up 6.1% on an organic growth basis and 4% on reported a basis. Adjusted operating profits were up 6.4% at €3.87bn, slightly ahead of analyst forecasts.
Consolidated beer volumes grew 4.2%, while Heineken-branded volumes rose 7.7%, the "best performance in a decade", said the brewer.
Volume growth was supported by the ongoing popularity of low and no-alcohol beers, with 13.1m hectolitres sold in 2018 against 12.5m in 2017. Heineken 0.0 is now sold in 38 markets, up from 16 in the previous year.
Jean-François van Boxmeer, chairman and chief executive, said 2018 had seen "superior top-line growth", adding: "Our premium portfolio grew double digit, led by our international brands, craft and variety, and cider portfolios. All regions grew, and Brazil recorded a strong performance following the successful integration of our two buisnesses."
At 1200 GMT, shares in Heineken were up 7.2% to €87.22.
However, van Boxmeer sounded a note of caution for the current year. He said: "Going into 2019, we expect the environment to remain uncertain and volatile. Overall, we anticipate our operating profit to grow by mid-single digit on an organic basis."
All brewers are facing higher costs for transport and raw materials such as barley. Analysts have also pointed to shifting drinking habits, which have seen beer fall out of favour in some markets.
Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: "Heineken’s results confirm a lot of what we already knew. The Americas is tough, with margins a struggle in Latin America and volumes in decline in the US as younger consumers increasingly favour spirts over beer. Europe has delivered a surprisingly positive set of results thanks to Heineken’s premium offering, with has boosted both revenues and margins.
"Longer term, Heineken remains focused on emerging markets as it positions itself to benefit from long-term growth, and with developing economics accounting for 64% of volumes but just 49% of revenues and 56% of profit, there’s plenty of scope to pull the price lever in the years to come."
As well as Heineken, the brewer owns a range of other brands including Birra Moretti, Amstel and Strongbow cider.