Heineken posts first-half profit of €1.3bn as drinkers unfazed by price hikes and inflation

The Heineken brewery in Cork at Lady's Well, Leitrim Street.

Heineken posted better-than-expected beer sales as customers kept drinking but maintained a cautious outlook amid inflationary pressures.

First-half beer volumes rose 7.6%, better than the 5.7% average analyst estimate, the Dutch brewer said in a statement.

The results show that beer drinkers have so far tolerated price increases amid soaring inflation.

Heineken warned earlier this year that consumers may cut back on purchases, threatening the industry’s recovery from the pandemic.

“The amount of pricing we and others are taking at some point may start to have an effect and that’s why we’re being cautious,” chief executive Dolf van den Brink said in an interview.

The company raised prices by almost 9% in the first half from a year earlier and more hikes may come in the remainder of this year, said chief financial officer Harold van den Broek.

Higher energy prices may curb Heineken’s 2023 recovery, potentially reducing consensus operating income by 3-6% to mid- to high-single-digit expansion as the company takes time to correctly pass through these costs, said Duncan Fox, consumer-goods analyst at Bloomberg Intelligence.

Robust volume — particularly for the main Heineken brand — show how well the company is positioned for long-term growth, due to sensible pricing during the current crisis, he said.

Heineken reiterated its outlook for modest growth this year as a rebound in demand is clouded by Russia’s war in Ukraine and price growth pressures. It revised its guidance for 2023 and now expects mid- to high-single-digit operating profit organic growth.

Revenue rose 22% to €16.4bn, driven by price increases, good weather in Europe and a recovery in Latin America.

The Dutch brewer reported adjusted net profit of €1.33bn for the half, up 40% from a year earlier. Heineken has previously

Heineken posts first-half profit of €1.3bn as drinkers unfazed by price hikes and inflation

said it expects an impairment of €400m due to its retreat from Russia amid the war in Ukraine.

“Progress has been made on an 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. 

— Bloomberg