Lager leviathan Heineken served up forecast-beating earnings for 2021 thanks to higher prices and cost savings, sending the shares up 1.5% to €96.76 on the Euronext Amsterdam exchange.
However, the brewing behemoth’s share price gains were capped after it warned surging cost inflation would further push up pint prices and said the risk of shortages was growing as brewers struggle to deliver beer to supermarkets, pubs and restaurants amid ongoing global supply chain disruption.
CLOUDY OUTLOOK
The Amsterdam-based brewer behind flagship lager Heineken as well as the Amstel, Tiger and Strongbow brands expects 2022 to be ‘significantly impacted’ by inflation and ‘supply chain resilience pressures’.
Led by chairman and chief executive Dolf van den Brink, Heineken said it will seek to offset ‘sharp’ increases in the prices of everything from barley and aluminium as well as soaring energy and freight costs through price increases, though this ‘may lead to softer beer consumption’.
Heineken also cast doubt over its 2023 operating profit margin target of 17% due to the uncertain impact of inflation on consumption. Investors can expect an update on its 2023 guidance later in the year.
REFRESHING EARNINGS BEAT
While the inflation warning left a bitter taste, Western Europe’s biggest beer producer reported a near-44% surge in like-for-like operating profit to €3.4 billion for 2021, north of the €3.3 billion analysts were calling for.
Annual revenue fizzed up by 11.8% to almost €26.6 billion as Heineken enjoyed a big bounce back from the pandemic, with beer volume growing 4.6% organically.
In the fourth quarter, beer volume grew 6.2%, benefiting from fewer restrictions in Europe relative to 2020 as well as continued momentum in the Americas and Africa, Middle East and Eastern Europe (AMEE) and a sequential recovery in Asia Pacific versus the third quarter.
‘We made a big step towards recovering to pre-pandemic levels, and in parts going beyond,’ commented van den Brink, who is ‘pleased with the great momentum of the Heineken brand’.
He added that Heineken has ‘raised the bar on sustainability and responsibility’ and is ‘making big strides in right-sizing our cost base’.
