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Lockdowns and logistics issues hit Heineken sales

·2-min read
Heineken sales have slipped after its Asian business was hit by lockdowns   (PA Archive)
Heineken sales have slipped after its Asian business was hit by lockdowns (PA Archive)

Heineken's hopes of matching 2019 results have been foiled after supply chain snarls and Covid lockdowns in South East Asia hit sales, the world's second-largest brewer said today.

The Amsterdam-based firm, whose brands include Amstel, Birra Moretti and Bulmers, reported seeing rising commodity costs and "deeply impacted" sales in Asia Pacific in the three months to October.

It reported net profits for the first nine months of 2021 of €3 billion. Volume sales were down just over 5% in the third quarter - a worse outcome than analysts had expected.

UK sales were down, "impacted by logistics disruptions", despite high-end beers like Moretti selling in greater numbers.

Like all companies, Heineken is facing soaring costs for key raw materials such as aluminium, and ongoing shipping and trucking cost inflation. Bosses plan to "be assertive on pricing", boost productivity and manage costs to offset the inflation.

Chairman and CEO, Dolf van den Brink, said: "As anticipated, our Asia Pacific region was deeply impacted by the pandemic in the third-quarter. We see first signs of recovery and I admire the resilience and solidarity of our people as we navigate these challenges.

"The macro environment remains volatile and we are responding accordingly. We are taking an assertive approach to pricing and cost across all of our markets to meet this challenge. Therefore, our expectations stay unchanged, with full year results remaining below 2019."

Heineken has said it plans to make €2 billion (£1.75 billion) of cost savings by 2023.

The firm revealed in February that it would axe 8,000 jobs -nearly one in 10 of its 85,000 strong global workforce — after reporting a net loss of €204 million (£178 million) in 2020, down from a €2.2 billion (£1.93 billion) profit in 2019.

Today van den Brink said bosses "continue to be enthusiastic about the long-term opportunities ahead". He pointed to the giant's surging digital sales, and Heineken's focus on "revitalising" its portfolio with focus on premium, low- and no-alcohol beers, and other drinks.

Shares fell by 2% to €92 on Euronext in early trading on Wednesday morning.

The update came as the Competition and Markets Authority (CMA) said it will refer Admiral Taverns' takeover of rival Hawthorn's community pubs estate to its second phase of investigation, unless the watchdog is "offered an acceptable undertaking to address" competition concerns.

Admiral Taverns bought 674 largely freehold sites in July for £222.3 million from FTSE 250-listed property firm NewRiver.

The CMA said it has decided "it is or may be the case that the following merger has resulted or may be expected to result in a substantial lessening of competition".

A spokesperson for Admiral said: “We acknowledge the announcement this morning as we go through this process and are working with the CMA. We’re confident that our proposals will satisfy the CMA’s concerns.”

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