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Heineken surpasses profit projections with higher first-half earnings

Heineken surpasses profit projections with higher first-half earnings

Heineken NV, the brewer of Heineken, Europe’s best-selling lager as well as Strongbow cider, Sol, and Tiger, has reportedly recorded higher-than-expected first-half earnings, with the purchase of beer witnessing strong growth despite prevailing cost-of-living pressures.

Heineken, the second-largest brewer in the world, registered more beer sales than anticipated, with rapid expansion across all regions and profit and revenue surpassing market consensus.

According to Dolf van den Brink, Heineken’s CEO, the beer market is quite resilient, showing no signs of disruption in consumption patterns despite increased living costs.

The company has reiterated its belief that the margin would see a modest increase or remain stable this year. However, it has apparently targeted a moderate to high single-digit percentage rise in operating profits for 2023.

While Heineken’s previous target was to increase its operating margin to 17% in 2023, a sharp rise in input costs cast doubt on the achievability of that goal. Before the recent posting, the market expectation was 16%, the same as what was achieved in the first half of 2022.

Harold van den Broek, the Chief Financial Officer of Heineken, has stated that the rising costs of inputs like aluminum or barley would serve as a key factor in 2023, despite a slight relaxation in recent months, given hedging for the upcoming 12-18 months. He further added that the firm was conducting an evaluation to ensure that it could operate sans natural gas supply, in the event of a cut-off from Russia.

According to reports from Heineken, beer volume has risen by almost 7.6%, along with an acceleration in Q2 of 2022 as well as an expansion in all regions. This includes the Asia Pacific, which is witnessing a strong recovery from COVID-19 lockdowns, and a strong performance in Europe and the Americas, where the number of consumers drinking at restaurants and bars has increased.

Similar to industry-leading firm Anheuser-Busch InBev, Heineken has apparently gained significant benefit from the price hikes, as consumers in major markets like China, Vietnam, and Brazil become more accepting of higher-priced “premium” beers.

Source Credit: https://retail.economictimes.indiatimes.com/news/food-entertainment/grocery/heineken-boosted-by-rising-beer-demand-but-sees-2023-margin-squeeze/93286172

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Meghna Singh

An English Literature graduate, Meghna Singh ventured into the profession of content development to incorporate her knack for writing articles across verticals including technology, healthcare, business, and alike for News Origins and RunningAfrica. She has also completed her MBA in Tourism and worked as a content creator in the field of product development.