Heineken hit by cost pressures while reporting positive growth

By Michelle Perrett

- Last updated on GMT

The Dutch brewer has been impacted by the war in Ukraine.
The Dutch brewer has been impacted by the war in Ukraine.

Related tags: Supply chain, Drinks

Heineken, the Dutch brewer, has revealed that the war in Ukraine has brought additional uncertainty to the global economic outlook and commodity markets.

In its first quarter results it said that it expected “mounting inflationary pressures​” to impact household disposable income and that there is a “consequent risk”​ to beer consumption later in the year. 

It added that there were further cost pressures emerging from rising input costs, supply chain challenges, and from its decision to leave Russia. 

The news comes as earlier this year the company revealed double digit value and volume growth​ in its results for 2021. 

Growth

Overall the company saw revenue growth 35.9% while organic beer volume grew by 5.2% and premium volume 6.3% organically

It said that in the UK, total volume grew in the forties, driven by the on-trade recovery. While its premium portfolio grew in the thirties, led by Birra Moretti, Desperados and Old Mout

Heineken chief executive Dolf Van Den Brink, chairman of the executive board, said: “We had a solid start to the year, in line with our expectations, especially benefitting from strong channel mix.”

Uncertainty

He added: “Looking ahead, we see more macro- economic uncertainty and expect significant additional inflationary headwinds putting further pressure on our cost base. We will take additional actions including pricing to manage these challenges whilst we continue to invest in superior, balanced growth and sustainable value creation.”

Heineken revealed that premium beer ​volume grew 6.3%, outperforming the portfolio in the majority of our markets in the first three months of 2022. Heineken® 0.0 ​grew in the twenties with strong momentum in Brazil, Mexico, the USA, Chile and South Korea. 

 

What the analyst said: 

Walid Koudmani, chief market analyst at financial brokerage XTB said: "Heineken published excellent results today showing revenue growth 35.9% with Heineken volume growth of 12.9% despite the noticeable rise in production and distribution costs.

"While Outlook for the full year of 2022 remains unchanged, investors may take this as a positive sign as the company remains resilient to inflationary pressures while continuing to expand its offering."

Related topics: Drinks, Operations

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