Heineken reported better-than-expected beer sales as customers continued to drink, but maintained a cautious outlook amid inflationary pressures.
First-half beer volumes rose 7.6 percent on an organic basis, better than the average analyst estimate of 5.73 percent, the Dutch brewer said in a statement on Monday.
The results show that beer drinkers have tolerated price increases despite rising inflation.
Heineken warned earlier this year that consumers could cut back on their purchases, which could jeopardize the industry’s recovery from the pandemic.
“The level of pricing that we and others are making at any given time can have an impact and that’s why we’re cautious,” Chief Executive Dolf van den Brink said in a phone interview following the earnings report.
Shares of the company fell as much as 3.5 percent in early trading. They slipped 5.2 percent this year.
The company raised prices by an average of 8.9 percent year-on-year in the first half and more price hikes could follow later in the year, CFO Harold van den Broek said.
Higher energy prices could slow Heineken’s recovery in 2023, potentially reducing consensus operating income by 3-6 percent to mid- to high-single-digit expansion as the company needs time to properly calculate those costs, Bloomberg Intelligence said.
Robust volume, particularly for Heineken’s eponymous brand, shows how well-priced the company is positioned for long-term growth during the current crisis, said consumer goods analyst Duncan Fox.
Heineken reiterated its forecast for modest growth this year as any recovery in demand is clouded by Russia’s war in Ukraine and pressure on price growth.
The company revised its 2023 guidance and now expects organic operating profit growth to be in the mid- to high-single digits, rather than targeting an operating margin of 17 percent.
“For us, the stronger-than-expected performance in 2022 more than outweighs the caution for 2023, and we believe the stock will recover later today,” said Trevor Stirling, managing director of European and American alcoholic beverages at the research firm Amber Autonomous.
Organic sales rose 22 percent to 16.4 billion euros, driven by price increases, good weather in Europe and a recovery in Latin America.
The Dutch brewery reported adjusted net income of 1.33 billion euros for the half-year, organic growth of 40 percent year-on-year. Heineken has previously said it faces a €400m write-down as a result of its withdrawal from Russia amid the war in Ukraine.
“Progress has been made in the orderly transfer of our business to a new owner and an agreement is expected to be reached in the second half of the year,” the company said.
https://www.independent.ie/business/world/heineken-sales-jump-even-as-inflation-clouds-outlook-41881685.html Heineken sales rise even as inflation outlook dims