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Aug. 3, 2020, 1:00 a.m. EDT

Heineken N.V. reports 2020 half year results

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(GLOBE NEWSWIRE via COMTEX) -- Amsterdam, 3 August 2020 - Heineken N.V. /zigman2/quotes/202537894/composite HEI.A -4.48% (otcqx:HEINY) announces:

KEY HIGHLIGHTS

- Net revenue (beia) organic growth -16.4%; net revenue (beia) per hectolitre -3.6%

- Consolidated beer volume -11.5%

- Heineken(R) volume -2.5%

- Operating profit (beia) organic growth -52.5%

- Net profit (beia) EUR227 million, -75.8% organically

- Diluted EPS (beia) EUR0.39 (2019:EUR1.84).

CEO STATEMENT

Dolf van den Brink, CEO and Chairman of the Executive Board, commented:

"The first half of 2020 was defined by unprecedented challenges and I am very proud of our employees all around the world who are adapting quickly to new emerging realities while taking care of each other, our customers and our communities.

The Heineken(R) brand once again demonstrated its strength with double digit growth in 14 markets and continued momentum of Heineken(R) 0.0.

Our bottom-line was disproportionately impacted due to the decline in the European on-trade, as well as temporary government restrictions on our activities in Mexico and South Africa. We have taken mitigating actions and will further intensify our focus on costs.

HEINEKEN has entered the crisis with a strong financial position, a diversified global footprint, great brands, superior consumer and customer intimacy and highly dedicated and talented teams. Moving forward and as markets recover, we will leverage these unique strengths to chart our next growth chapter."

FINANCIAL SUMMARY1







        IFRS Measures                 EUR million       Total growth           BEIA Measures                          EUR million     Organic growth2
        Revenue                       11,156  -18.0 %                Revenue (beia)                       11,156                     -15.5  %
        Net revenue                   9,243   -19.2 %                Net revenue (beia)                   9,243                      -16.4  %
        Operating profit              85      -94.8 %                Operating profit (beia)              827                        -52.5  %
                               Operating profit (beia) margin       8.9 %                                          
        Net profit                    -297    -131.7 %               Net profit (beia)                    227                        -75.8  %
        Diluted EPS (in EUR) -0.52                      -131.5 %               Diluted EPS (beia) (in EUR) 0.39                       -78.6  %
                                                                     Free operating cash flow             -809                        
                                                                                        Net debt / EBITDA (beia)3              3.5x   
        


1 Consolidated figures are used throughout this report, unless otherwise stated; please refer to the Glossary for an explanation of non-GAAP measures and other terms used throughout this report.

2 Organic growth shown, except for Diluted EPS (beia) which is total growth.

3 Includes acquisitions and excludes disposals on a 12 month pro-forma basis.

In the first half of 2020, HEINEKEN's markets and businesses were materially impacted by the COVID-19 pandemic. Given the unprecedented nature of the situation, HEINEKEN has increased its disclosures. There are no changes vs the announcement of 16 July.

UPDATE ON OUR RESPONSE TO COVID-19

Since the beginning of the COVID-19 crisis, we have been adhering to three guiding principles. First, the health, safety and trust of our people is of paramount importance. Second, we do everything we can to safeguard the continuity of our business and protect the appeal of our brands. This includes supporting the business continuity of our customers and suppliers. And, third, we offer our support to communities that are most impacted by the pandemic.

In view of those principles, on 8 April 2020, we outlined our commitment to our people, customers, suppliers and communities in which we operate.

Significant efforts have been made within the organisation to support our employees in doing their jobs safely, by working from home where possible, and applying the standard COVID-19 preventive measures, including physical distancing, personal hygiene and disinfection protocols and providing sufficient personal protective equipment. In addition, to provide some security for

our employees in these trying times, we have committed to not carry out structural lay-offs

as a consequence of COVID-19 in 2020.

We have supported our on-trade customers across all regions with advice and tools to safely reopen, helping them set up home delivery and on-line businesses and supporting them financially, for example by waiving rental payments. Our Back the Bars initiative was launched to support on-trade customers in 21 countries and has raised over EUR10 million.

We continued to pay all suppliers on time and have also provided advanced payments to suppliers who were heavily impacted by COVID-19.

Pandemic relief totalling over EUR23 million has been deployed to front-line medical facilities, including donations of water, non-alcoholic beverages, hand sanitiser and monetary contributions.

TOP-LINE PERFORMANCE

Top-line performance was materially impacted as multiple countries took far-reaching measures to mitigate the spread of COVID-19 including restricted movement of populations, outlet closures and mandatory lockdown of production facilities. At this moment, none of our breweries are closed due to government restrictions.

Net revenue (beia) declined 16.4% organically driven by a 13.4% decline in total consolidated volume and a 3.6% decline in net revenue (beia) per hectolitre due to adverse channel, product and country mix effects. The underlying price mix on a constant geographic basis was down 1.3%.

Consolidated beer volume declined 11.5% organically. As expected, the impact of the COVID-19 crisis deepened in the second quarter when beer volume declined 19.4%. After a low point in April, volume started to gradually recover into June as lockdowns were lifted around the world and customers restored depleted inventories. Premium volume declined high-single digits, outperforming the rest of the portfolio, mainly driven by the resilience of Heineken(R).







        Consolidated beer volume            2Q20                     2Q19                     Organic HY20                      HY19                      Organic
        (in mhl)                                                                              growth                                                      growth
        Heineken N.V.                       51.0  63.4  -19.4 % 102.6  116.1  -11.5 %
        Africa Middle East & Eastern Europe 8.7   11.4  -23.9 % 18.1   21.6   -15.9 %
        Americas                            15.3  20.9  -26.8 % 34.6   40.7   -15.0 %
        Asia Pacific                        6.5   7.7   -13.6 % 13.9   15.1   -4.7 %
        Europe                              20.5  23.4  -12.5 % 35.9   38.7   -8.1 %
        


Heineken(R) volume declined 9.0% in the second quarter to close the first half with a 2.5% decline. Heineken(R) is the most trusted international beer brand and is outperforming the overall category. The brand grew double digits in 14 markets including Brazil, China, the UK, Poland, Germany, Ivory Coast and South Korea. Heineken(R) 0.0 grew double digits with growth across all regions and particular strength in the US, Mexico and South Africa. Following a pause, some of our global sponsorship platforms are resuming activities for the second half of the year.







        Heineken(R) volume   2Q20                    Organic HY20                     Organic
        (in mhl)                                                    growth                           growth
        Total                               9.7  -9.0 %  19.1  -2.5 %
        Africa Middle East & Eastern Europe 1.1  -37.0 % 2.4   -26.0 %
        Americas                            3.4  6.1 %   7.1   15.1 %
        Asia Pacific                        1.2  -9.5 %  2.7   -7.3 %
        Europe                              4.0  -8.5 %  6.9   -4.9 %
        


The international brand portfolio declined high-single digits. Amstel declined in the low-teens driven mainly by Spain and South Africa partially offset by continued strong growth in Brazil. Sol declined in the mid-twenties driven by Mexico. Tiger declined mid-single digits with sharp declines in Singapore, Cambodia and Malaysia and a small decline in Vietnam. In contrast, Desperados grew in the mid-teens, driven by France, Poland and the Netherlands.

Cider volume declined in the high-teens to 2.1 million hectolitres. Volume declined in the mid-twenties outside the UK, mainly driven by South Africa. New cider markets Russia, Mexico and Vietnam grew in the high-teens. In the UK, volume declined in the low-teens driven by pub closures.

Low & No-Alcohol (LONO) volume declined high-single digits to 6.3 million hectolitres. The no-alcohol portfolio declined mid-single digits, with strong growth of Heineken(R) 0.0. Our LONO portfolios grew in more than 20 markets, particularly the US, the UK, Egypt and Singapore.

Digitalisation accelerated throughout the crisis as consumers changed shopping patterns and customers adapted to the lockdowns. As a result, our e-commerce platforms showed strong growth:

- Beerwulf, our business-to-consumer platform in Europe, had more than 3 million visitors, half of them new. Online sales of our home-draught systems like the Sub and Blade have more than doubled during the lockdown.

- Six 2 Go, our business-to-consumer platform in Mexico, received ten times the number of orders in the first six months of 2020 versus the full year of 2019.

- Our business-to-business digital platforms are operational in 24 markets. At the end of 2019, we were connected to more than 60 thousand customers in traditional channels representing more than EUR1 billion of net revenue. We expect to more than double the number of customers connected this year.

OPERATING PROFIT PERFORMANCE

Operating profit was materially impacted by the revenue decline, incremental expenses and impairments due to the COVID-19 crisis, partially offset through mitigation actions.

Operating profit (beia) declined 52.5% organically, with lower profit in all regions. Operating profit declined 94.8%. 84% of the organic operating profit decline was driven by Europe, Mexico and South Africa. The operational deleverage was amplified by the volume decline in the on-trade in Europe.

/zigman2/quotes/202537894/composite
US : U.S.: NYSE
$ 89.20
-4.18 -4.48%
Volume: 105,298
Sept. 21, 2020 10:59a
P/E Ratio
36.27
Dividend Yield
0.18%
Market Cap
$13.57 billion
Rev. per Employee
$340,640
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