Heineken warns of COVID, rising costs after doubling in profits

BRUSSELS, Aug 2 (Reuters) – Heineken, the world’s second-largest brewer, expects the pandemic to weigh on major Asian and African markets for the rest of the year and has warned that rising prices for commodities would nibble its margins, after announcing its results in the first half above expectations.

Chief Executive Officer Dolf van den Brink, who has been at the helm for a year, said the company was happy with the good first half, but expressed caution with results expected to remain below pre-pandemic levels in 2021 in his outfit.

“Unlike last year, we are now seeing a significant impact on business in Southeast Asia,” Van den Brink told Reuters in a telephone interview on Monday, referring to the fallout from the COVID-pandemic. 19.

He said Vietnam, one of the top three markets for Heineken, was a concern, with closures imposed on its strongholds in cities and the south of the country. Elsewhere, the company’s Malaysian brewery is closed and reduced tourism is hitting Indonesian sales.

The maker of Europe’s best-selling lagers Heineken, Tiger and Sol, had previously forecast market conditions to improve in the second half of 2021, depending on the rollout of vaccines.

Rising raw material costs, including for barley, sugar and aluminum for cans, would start to affect Heineken in the second half of 2021 and would have a “big effect” in 2022, when hedging contracts don’t. would lessen the increases more.

Marketing spending would also be higher as bars reopen.

Anheuser-Busch InBev (ABI.BR), the world’s largest brewer, reported higher second-quarter beer sales last week, but rising costs for cans and transportation squeezed profits. Read more

Heineken sold nearly 10% more beer in the first half of the year than a year ago and Van den Brink said the company would seek to be ‘price assertive’, having reached prices nearly 10% higher per hectolitre of beer in the Americas and Africa / Middle East in the first half.

Its shares rose nearly 2% at the start of the session before dropping the gains to remain stable at 98.20 euros at 07:10 GMT.

The company said more than half of the savings from its three-year plan to save € 2 billion and restore profit margins to pre-pandemic levels by 2023, in part thanks to the elimination of 8,000 jobs, should be achieved by the end of 2021. read more

First-half operating profit before exceptionals doubled to € 1.63 billion (€ 1.93 billion), compared to the average forecast of a company survey of 1.22 billion euros. ($ 1 = € 0.8427)

Reporting by Philip Blenkinsop; Editing by Kirsten Donovan, Christian Schmollinger and Uttaresh.V

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