Heineken’s net profits for the first half of 2020 were 75.8% lower than the same period last year after bars and restaurants worldwide were forced to close.
After costs were subtracted from the figures, Heineken’s operating profit was €827 million, down 52.5% compared to 2019, with lower profits in all markets.
Dolf van den Brink, Heineken’s new chief executive and chairman, said that the Dutch brewer’s results were ” disproportionately impacted” by bar and restaurant closures in Europe throughout the spring, as well as temporary government restrictions on alcohol production and sales in Mexico and South Africa.
However, Brink, who took over from outgoing CEO Jean-François van Boxmeer on 1 June, reinforced the company’s commitment earlier in the year to not lay-off staff as a cost-cutting measure to help mitigate the impact of the coronavirus pandemic.
Beer volumes fell 11.5% organically over the first six months of the year, but fell more rapidly in the second quarter as more countries such as the UK and US’s on-trade venues were unable to sell beer unless they could operate as takeaways. Volumes for April to June were 19.4% lower than the same period last year.
There is some hope now that on-trade venues have reopened worldwide. Last week, Stella Artois brewer AB InBev said its volume sales grew 0.7% in June as European and US bars and restaurants tentatively came back to business, while by the end of June, more than 80% of Heineken’s pub estate, Star Pubs & Bars, were up and running again.
Although sales had picked up in June and July, this was more to do with venues buying kegs to refill their pipelines, Brink said. With many sites operating at half capacity to accommodate social distancing, and consumers still wary of heading back to the pub, there is no guarantee that sales growth will bounce back this year.
“We want to be cautious”, he told analysts on 3 August, adding he expects “there will still be volatility as consumers adapt” to the what is being dubbed the ‘new normal’.
“It will be a case of two steps forward, one step back”, Brink said. “Until there will be a vaccine or structural solution to the coronavirus we don’t see the on-trade coming back to its expected level.”