Heineken full-year results lifted by strong growth in Mexico, Vietnam

Heineken N.V. on Wednesday reported a 1.4% rise in revenue for the 2016 financial year (Jan – Dec) to €20.8bn ($21.94bn) compared to €20.5bn in 2015. The company said its revenue was bolstered by strong sales in Vietnam and Mexico. It noted that it sold 3% more beer in 2016 with the biggest increase coming from Asia.

The Dutch brewer said that sales also rose in Europe, especially in France, Italy, Poland, Spain and Mexico, which offset declines in Nigeria, the Democratic Republic of Congo (DRC) and Russia, where it has been battling macroeconomic headwinds.

“Performance in key European markets was good and results in Vietnam and Mexico were strong,” commented Heineken CEO Jean-Francois van Boxmeer in a press release. “In Africa, Middle East and Eastern Europe market conditions remained tough, most notably in Nigeria, Democratic Republic Congo, and Russia.

The company’s Chief Financial Officer, Laurence Debroux, forsees the Nigerian naira being devalued again later this year.

In the premium market, Heineken said that its Heineken brand saw 3.7% volume growth and double-digit sales growth across markets in Brazil, Mexico and Romania.

The brewer noted that its cider drinks grew in volume to mid-single digit, particularly variants of Strongbow Apple cider, which grew in the UK and parts of Europe as well as in Africa, Middle East and Eastern Europe, South Africa and Russia.

Heineken said it continues to invest in key developing markets and in 2016 entered new markets in Ivory Coast, and the Philippines, and increased production capacity in China, Vietnam, Ethiopia and Cambodia.

Also in December, the company acquired the Punch Tavern (1,900 pubs in the UK). And earlier this week, the brewer announced it had agreed to buy Kirin’s Brazilian unit for €1.025bn.

Heineken said its net profit before exceptional items rose 2.5% to €2.098bn, from €2.048bn in 2015, but fell back to €1.54bn, from €1.89bn, a 19% drop from the previous year after subtracting exceptional loss of €286m in the DRC (€233 million asset impairment charge in the first half and an additional €53 million in the second half of the year). The company notes that 2015 net profit was lifted by an exceptional asset gain of €379m from the sale of EMPAQUE in Mexico.

Looking forward, the company said that economic conditions are expected to remain turbulent and it is assuming a negative impact from currency comparable to 2016. However, it notes that barring any unforeseen macroeconomic and political developments as well as the impact of its proposed acquisition of Kirin’s Brazil unit and the Punch Taverns in the UK, it expects continued margin expansion in 2017 in line with medium term margin guidance of a year-on-year improvement in operating profit margin of about 40bps.

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