February 12, 2020 / 6:43 AM / 9 days ago

Heineken sees more profit growth in final year for long-serving CEO

BRUSSELS (Reuters) - Heineken (HEIN.AS), the world’s second largest brewer, forecast lower barley and aluminum costs would help to boost profits this year, when its long-serving chief executive will step down.

FILE PHOTO: Glasses of Heineken beer are seen at a restaurant in Hanoi, Vietnam May 30, 2019. REUTERS/Kham/File Photo

Shares in the maker of Heineken, Europe’s top-selling lager, as well as Tiger, Sol and Strongbow cider, jumped more than 6% in early Wednesday trading as investors cheered solid fourth-quarter results, led by growth in Vietnam, Cambodia and Brazil.

The company said revenues should rise this year on higher volumes, prices and consumers shifting to more expensive beers.

Along with a more moderate increase in input costs, that should result in a mid-single digit percentage rise in operating profit in 2020, it added, while saying it was too early to assess the impact of the coronavirus outbreak on its business.

“We are cautious, we are just looking at the situation, but for sure it is not paralyzing, that would be too big a word, but it will have some consequences,” departing Chief Executive Jean-Francois van Boxmeer said on a conference call.

Van Boxmeer, who is a Belgian and has been CEO since 2005, is set to step down on June 1, a year earlier than expected. He will be succeeded by the company’s Asian chief, Dutchman Dolf van den Brink, Heineken said late Tuesday.

Analysts said the move was not a major surprise and Van den Brink, who has also headed Heineken’s U.S and Mexican operations, was a logical choice.

BRAZIL BOOST

Heineken said beer volumes grew by 4.1% in the fourth quarter, with the strongest increases in Vietnam, Cambodia and Brazil.

“A strong end to the year,” said Trevor Sterling, beverages analyst at Bernstein Securities, highlighting the double-digit growth in those three countries.

Brazil, where Heineken expanded to become the country’s second biggest brewer in 2017, is now the largest market for the Heineken brand.

Analysts’ average estimate is for 6% profit growth this year, according to a company-compiled consensus. Chief Financial Officer Laurence Debroux declined to put a numerical range on Heineken’s forecast.

The guidance is the same as that given by Heineken a year ago. However, the company tempered profit hopes in October, saying operating profit would rise by only 4%.

The final figure for 2019 before one-offs was 4.02 billion euros ($4.39 billion), a 3.9% rise and exactly in line with the market consensus.

On a regional basis, profit figures were also similar to expectations, with a slight outperformance in Africa, Middle East and Eastern Europe and the Americas against slight underperformance in Asia Pacific and Europe.

Reporting by Philip Blenkinsop; Editing by Aditya Soni and Mark Potter

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