18 November 2022

Heineken wants to buy remaining shares of Poland’s brewer Zywiec

Poland | If all goes to plan, Heineken will take Poland’s number two brewer, Grupa Zywiec, from the Warsaw Stock Exchange. In a transaction, announced on 18 October, the Dutch brewer acquired PLN 1.4 billion (USD 299 million) worth of shares from Harbin BV, the Dutch investment vehicle of the Australian barrister Allan Myers, 77.

Harbin, which was Zywiec’s second-largest shareholder, held 33.2 percent. After the sale, Harbin’s stake was reduced to 5 percent, it was reported.

Following the transaction, Heineken increased his shareholding to 93.36 percent and has since announced a tender offer for the remaining shares. After more than 31 years, the history of Grupa Zywiec on the Warsaw Stock Exchange will come to an end.

A very lucrative investment

In the late 1990s, Mr Myers and his business partner John Higgins invested some USD 5 million in what is now Grupa Zywiec. Due to the size of his stake, Mr Myers sat on the supervisory board of Zywiec and served as its Vice Chairman. Mr Myers and Mr Higgins have already resigned from the supervisory board.

Perhaps the Australians were clever to exit now. The Polish beer market has declined slightly for a number of years and profits have fizzled.

Costs inflation bites

In its third quarter results, published on 26 October, Grupa Zywiec recorded PLN 19.4 million (USD 4.2 million) in net profit, compared with PLN 107.5 million a year earlier. Operating profit was PLN 56.9 million (USD 12.5 million), versus PLN 102.3 million a year earlier.

Consolidated revenues were PLN 1.1 billion (USD 230 million), compared with PLN 989.9 million a year earlier.

In the nine months of 2022, Zywiec generated PLN 3 billion (USD 640 million) in net revenue, which is a slight increase over the same period last year, when it stood at PLN 2.7 billion. But consolidated operating profit only came in at PLN 169 million (USD 36 million), which is far less than what Zywiec achieved in the same period last year (PLN 395 million). Net profit was PLN 109 million (USD 23 million), compared with PLN 380 million a year ago

So much beer and so few profits

Zywiec’s CEO Simon Amor commented: “The results of Grupa Zywiec were negatively affected mainly by unprecedented inflation. The increase in revenue, which we achieved thanks to price increases, does not cover the cost increase driven by the energy crisis and a higher excise tax. In addition, our profit is reduced by higher financing costs related to interest rate hikes and a weak currency. In such unstable and difficult economic conditions, we will focus on improving internal efficiency.”

In 2021, Grupa Żywiec reportedly sold 11 million hl beer. It has breweries in Zywiec, Warka, Leżajsk, Elbląg and Namysłów. Heineken entered Poland in 1994, when it bought a 25 percent stake in Zywiec. For many years, Zywiec was a nice profit spinner. Not any longer, it seems.

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