City Snapshot: Heineken fails to scare drinkers as sales and profits soar despite higher prices | New
Heineken’s sales and profits rose by double digits as consumers drank more beer despite rising prices.
Net revenues jumped 24.3% to €16.4 billion in the first half, driven by continued demand for premium beverages, with organic beer volumes up 7.6% and premium volumes up by 10.2%.
The Heineken brand increased its volumes by 13.8% during the six-month period, achieving double-digit gains in more than 50 markets worldwide. This puts Heineken 32.9% ahead of 2019 volumes and overall beer volume 4.2% ahead of pre-pandemic levels.
Heineken benefited from a continued recovery in the restaurant sector in Europe and Asia-Pacific after the end of Covid restrictions.
However, higher prices also played a role in the increase in sales, with Heineken reporting a 15.3% increase in “underlying price mix”, which it said was driven by prices on all markets to cover input cost inflation.
The Dutch group’s operating profits increased by 24.6% to 2.2 billion euros during the half-year, while organic net profits increased by 40.2% to 1.3 billion euros.
CEO Dolf van den Brink said he was “encouraged” by the results.
“We have benefited from the recovery in Asia-Pacific and the restoration in Europe as consumers returned to bars, with demand resilient so far despite mounting inflationary pressures on consumer disposable income,” he said. -he adds.
“We outperformed the industry in more than half of our markets and the Heineken® brand again showed strong momentum, driven by increased brand support. Our pricing, revenue management and productivity actions offset significant inflationary pressures on our cost base. »
However, Heineken has warned there is a growing risk that growing pressure on consumer purchasing power will affect beer consumption in the future, with “significant” inflationary pressures on a cost basis set to continue. and will have an impact on the second half of 2022 and until 2023.
“The recent slowdown in certain raw materials is offset by unprecedented price levels and the risk of availability of natural gas, affecting in particular Europe, our largest region,” added the group.
“Our pricing and revenue management measures have effectively offset these inflationary pressures so far in absolute terms, and we remain committed to continuing to do so.”
Heineken shares opened down 2.7% this morning at €93.52.
Cranswick boosted its sales in the first quarter as UK pork prices soared.
In the 13 weeks to June 25, revenue grew 7.6% year-on-year, with comparable sales up 5.8% as strong growth in the UK was offset by the slowdown in foreign trade.
The group said it continued to “proactively” manage and mitigate “substantial and widespread” cost inflation through tight cost control and continued recovery.
UK pig prices rose 27% over the period, which Cranswick says reflects the rapid response to soaring feed prices, with wheat and soybeans hitting all-time highs . Cranswick reflected higher input costs in the price paid to its farms and third-party growers.
Export sales in the Far East were, as expected, lower than in the same quarter last year, as market prices fell from the high levels of the previous two years and the ongoing suspension export license to China for its Norfolk pork primary processing plant.
The price of Chinese pork has strengthened in recent weeks but remains below 2019 and 2020 highs, Cranswick added.
CEO Adam Couch said, “We have had a positive start to the year despite the challenging operating conditions that we continue to encounter.
“Our capital investment program remains firmly on track as we build the platform to execute our long-term growth strategy and we continue to make significant progress in implementing our growth strategy. “Second Nature” sustainable development at group level.”
Alternative meat investor Agronomy led a £1.7m seed funding round in the cultured food ingredients business Clean food group.
Founded in 2021, the company focuses on producing an alternative to palm oil through microbial fermentation.
Clean Food is currently in the process of identifying partners to work with and intends to submit a Novel Food Dossier for market approval of its alternative palm oil product to the European Food Standards Agency. and to the UK Food Standards Agency in 2022.
Agronomics chief executive Jim Mellon said it was “an important and exciting development” and the investment would help Clean Food achieve “R&D milestones” and prepare regulatory filings for approval.
“The technology has enormous potential for scale and we look forward to being part of the next stage of business growth,” he added.
The FTSE100 started the week up 0.3% at 7,447.92 pts.
Cranswick shares fell 1.1% to 3,302p in this morning’s first quarter update.
Elsewhere, risers included Science in Sport, up 6.5% to 33p, Bakkavor, up 5.3% to 92p, Nichols, up 3.6% to 1,248.2p, and Virgin Wines UK , up 2.7% to 68.8p.
McBride and PZ Cussons joined Cranswick as early fallers, down 2.8% to 15.6p and 1.4% to 207.5p respectively.
This week in the city
Markets seem a little calmer this week, but there is still a lot going on.
High street bakery chain Greggs reports interims tomorrow, while Domino’s Pizza also files first-half results and updates from Starbucks in the US.
Delivery service Just Eat Takeaway drops temps on Wednesday, with Yum! United States Trademark Reports.
High street bellwether Next provides an update on its first half on Thursday as Coke bottler Coca-Cola European Partners releases interims and Bayer owner and Nivea Beiersdorf are the latest conglomerates to provide second quarter figures , and, in the US, DoorDash and Kellogg’s are also updating the market.
The Bank of England’s monetary policy committee will also announce its latest interest rate decision on Thursday.
Pets at Home provides an update on its first quarter on Friday