14 November 2019Reading time: 3 minutes

Early this year, Heineken already warned that it would be difficult to surpass the results of 2018. Thanks to the FiFA World Cup, amongst others, the Dutch beer brewer last year achieved a total third quarter organic growth of 4,6 percent on an annual basis. Despite the difficulties which Heineken faced in the recent third quarter, the company still managed to sell 64,2 million hectoliters worldwide. As a result the organic growth was 2,3 percent on an annual basis. Over the first nine months of this year, Heineken achieved an operational net profit of 1,67 billion euro. This is an increase of 0,1 billion euro on an annual basis. According to Heineken this increase is partly due to the price increases, which the company implemented midway this year.

With a total sales volume of 24,6 million hectoliters in the third quarter of this year, Europe is the most important market for Heineken. In this region, the beer brewer achieved a third quarter organic growth of 1,6 percent on an annual basis. Especially in France, the United Kingdom and Italy the sales increased, while in its home country the Netherlands Heineken sold less beer.

The largest sales volume increase was achieved in Asia. In this region the beer brewer gained an organic growth increase over the third quarter of 13,9 percent on an annual basis to 7,5 million hectoliters. The strategic cooperation between Heineken and China Resources (CR) Beer, could strengthen the market position of the Dutch beer brewer in China within the following years.

In the United States and South-America however, the organic growth of Heineken decreased in the third quarter with 0,5 percent to 21,5 million hectoliters. For Heineken this combined market is the second largest market.

In the US the beer brewer struggled with a decreasing demand for especially their Mexican beer brand Tecate. Heineken also experienced problems in the US due to a shortage of beer cans with a capacity of 24 ounce (0.7 liters). It remains to be seen if these problems in the US will move to the background in the following period. In South-America, Heineken’s sales volumes dropped due to more challenging macro-economic developments.

Due to the challenging market conditions, Heineken lowered its forecast for the operational profit increase for the whole of 2019 to 4 percent. The beer brewer announced this in their trading update on October 23th. Earlier on Heineken counted on a growth of 5 percent. This news was not well received by investors and led on the same day to a stock price decrease of 3 percent. At this moment (November 4th, 2019) the stock price of Heineken is 90,90 euro, which is still more than 13 percent higher compared to a year earlier.

The future price of the stock is subject to several political, industrial and sector specific as well as economic factors. Investors should consider these risks when making their investment decisions. Developments can be different at any time than investors anticipated on, which could result in capital losses.

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19/09/2020 05:14:51