Heineken Swung to 2021 Net Profit Above Market Views; Warns of Inflation Hit -- Update

   By Michael Susin 
 

Heineken NV on Wednesday posted a swing to net profit for 2021, above market expectations, though the company warned that it expects to be significantly hit by inflationary pressures.

The Dutch brewer--which also owns the Sol, Birra Moretti and Tiger beer brands--said it expects significant inflationary and supply-chain pressure in 2022, as it continues to navigate an uncertain environment, and that it will raise prices to offset the increases.

The company expects adjusted input cost per hectolitre to increase in the mid-teens given due to the sharp increase in the prices of commodities, energy, and freight.

"We will offset these input cost increases through pricing in absolute terms, which may lead to softer beer consumption," the company said.

Heineken reported a net profit for 2021 of 3.32 billion euros ($3.77 billion), compared with a net loss of EUR204 million in 2020 and a company-compiled consensus of EUR2.28 billion based on 23 brokers' forecasts.

The world's second-largest brewer said adjusted operating profit--one of the company's preferred metrics that strips out exceptional and other one-off items--increased organically to EUR3.41 billion from EUR2.42 billion. The consensus forecast was EUR3.3 billion, taken from the company's website.

Adjusted operating profit margin for the year was 15.6%, it said. Net revenue for the year rose to EUR21.94 billion from EUR19.72 billion in 2020, it said.

Heineken said it made EUR1.3 billion gross savings as part of its "Evergreen" strategy and it is on track to deliver its 2023 objective of saving EUR2 billion on structural costs.

It said it will reverse the cost mitigation actions taken in 2021 to step up investments that will be partially offset by gross savings from the Evergreen program. "These changes are expected to have a greater impact in the first half of the year", it said.

The program included 8,000 jobs being cut and a reorganization of its operations and portfolio.

The board declared a dividend for the year of EUR1.24 a share. This compares with a total dividend of 70 European cents a share in the prior year.

Write to Michael Susin at [e-mail]

(END) Dow Jones Newswires

February 16, 2022 02:19 ET (07:19 GMT)

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