Heineken’s half-year net revenue grew 6.6% to €14.5bn on an organic basis, as double-digit price hikes helped to offset 5.4% lower volumes.
Underlying operating profit fell 8.8% to €1.9bn, driven by a decline in the group’s most profitable Asia Pacific region. Revenue growth and productivity improvements were more than offset by inflated costs and increased marketing spending.
Free cash flow fell from an inflow of €1.1bn to an outflow of €467m. Net debt increased from €13.5bn to €17.6bn, driven by the cash outflow for acquisitions, shareholder returns, and higher levels of borrowing.
In the second half, volumes are expected to improve to a low single-digit decline. Full-year underlying operating profit guidance has been downgraded, now expected to grow organically in the mid-single-digit range.
The group announced an interim dividend of €0.69 per share.
The shares dropped 7.3% following the announcement.
Aarin Chiekrie, equity analyst at Hargreaves Lansdown:
“Heineken’s had a wobble in the first half with a big miss versus market expectations, causing the shares to stumble in early trading. Despite this, price hikes were enough to offset lower volumes, helping the top line move to keep moving in the right direction for now.
The group owns high-end favourites such as Heineken, Birra Moretti, Beavertown and many more. There’s been a slight shift in the mix of beers sold towards these more premium products, indicating that pub-goers drinking these pricey brands are proving more resilient to inflationary pressures. Encouragingly, non-alcoholic offerings continued to show strong momentum too. Health-conscious consumers continued the flagship Heineken 0.0 brand, which grew by double digits in key markets.
But bumper revenues didn’t make their way down to the bottom line as inflationary pressures and increased marketing spending took their toll. That’s led the full-year profit outlook to be tempered down to mid single-digit growth. Where things move from here will depend on how well consumers can stomach further price hikes for their favourite beer brands.”
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