Heineken and Carlsberg post contrasting results for 2015

Bad timing. Two of the world’s major brewers released their annual results on the same day. And they could not have been more different. While Dutch Heineken benefitted from rising demand for premium beers in Latin America, the Danish brewer Carlsberg continued to suffer from declining demand in Russia.

Heineken, the world’s number three brewer, on 10 February 2016 reported a 25 percent rise in net profit to EUR 1.9 billion (USD 2.1 billion) on a 6.5 percent rise in revenue to EUR 20.5 billion. Its latest earnings were buoyed by strong organic sales growth in the Americas and Asia Pacific regions, particularly in Mexico, Brazil and Vietnam.

It did not do as well in Africa, the Middle East and Eastern Europe, where beer volume sales declined 2 percent over 2014. In Nigeria, Heineken’s second-largest market, sales were particularly under pressure as the country’s oil-dependent economy is hit by low crude prices. In China, the brewer is also experiencing a slowdown after years of growth.

Meanwhile, Carlsberg saw an annual loss of around EUR 231 million (USD 261.8 million), which was not quite as bad as initially expected by the analysts. Even so, the 2015 loss compares unfavourably with the EUR 900 million in profit which Carlsberg booked in 2014. In its Eastern European region, its operating profit dropped 36 percent as beer volume sales dipped 14 percent in 2015. Worse still for Carlsberg, its eponymous brand declined 2 percent in its premium markets.

Already in November last year, the company announced a restructuring programme and redundancies.

Both brewers concur that 2016 will be marked by “volatility”. Carlsberg estimates it will generate “low-single-digit” growth in operating profit in 2016, with its Asian operations offsetting losses in Russia and Eastern Europe. The company said it will unveil its new strategy for growth to investors on 16 March 2016.

Heineken would not be drawn out on a specific forecast. Its CEO and Chairman Jean-Francois van Boxmeer said: “Whilst we expect further volatility in emerging markets and deflationary pressures in 2016, we are confident that we will again deliver top and bottom line growth, as well as margin expansion in line with our guidance.”