Heineken slips to a loss in 2020
The Netherlands | The pandemic even brought Heineken to its knees. The world’s number two brewer reported a net loss of EUR 204 million (USD 248 million) for 2020, compared with a net profit of EUR 2.2 billion in 2019. Global beer sales dropped 8 percent organically to 222 million hl, the firm said on 10 February 2021.
Heineken’s CEO, Dolf van den Brink, is not to be envied. He took over from Jean-Francois van Boxmeer just as the pandemic hit. He cannot be happy that his first year at the helm turned out the most disruptive in the brewer’s recent history.
Turnover fell 17 percent to EUR 23 billion (USD 28 billion), following the closure of bars and cafes in many countries, the company said. Operating profit declined 79 percent to EUR 778 million (USD 943 million).
More than 90 percent of the profit decline was driven by Europe, Mexico, South Africa and Indonesia alone. In South Africa, more than 30 percent of the brewer’s previous volume was wiped out, due to months-long prohibition. In Indonesia, volume sales were down over 40 percent, after the collapse in tourism on Bali.
A protracted recovery
The brewer hopes for a recovery in the second half of this year, as in January less than 30 percent of bars and pubs in Europe were operating. However, it still expects 2021 revenue, operating profit and operating profit margin to be below 2019 levels.
What is more, the recovery could take years. Heineken forecast that it will achieve an operating profit margin before one-off items of 17 percent by 2023. That compares with 12.3 percent in 2020 and 16.8 percent in 2019.
It has unveiled a cost saving plan, called EverGreen – a term which can be interpreted as either defiant or desperate. It plans to bring costs down by around EUR 2 billion (USD 2.4 billion) over the next three years. Its global restructuring programme will shed about 8 000 jobs or 9 percent of total, Heineken said.
