Heineken Sees More Profit Growth In Final Year For Long-Serving CEO
Heineken, the world's second largest brewer, has forecast that lower barley and aluminium costs will help to boost profits this year, the year when its long-serving chief executive will step down.
Shares in the maker of Heineken, Europe's top-selling lager, as well as Tiger, Sol and Strongbow cider, jumped more than 6% as investors cheered solid fourth-quarter results, led by growth in Vietnam, Cambodia and Brazil.
The company said that revenues should rise this year on higher volumes, prices and consumers shifting to more expensive beers.
Along with a more moderate increase in input costs, that should result in a mid-single digit percentage rise in operating profit in 2020, it added, while saying that it is too early to assess the impact of the coronavirus outbreak on its business.
"We are cautious, we are just looking at the situation, but for sure it is not paralysing, that would be too big a word, but it will have some consequences," departing CEO Jean-Francois van Boxmeer said on a conference call.
Van Boxmeer, who is a Belgian and has been CEO since 2005, is set to step down on June 1, a year earlier than expected. He will be succeeded by the company's Asian chief, Dutchman Dolf van den Brink.
Analysts said that the move was not a major surprise and that Van den Brink, who has also headed Heineken's US and Mexican operations, was a logical choice.
Heineken said that beer volumes grew by 4.1% in the fourth quarter, with the strongest increases in Vietnam, Cambodia and Brazil.
"A strong end to the year," Bernstein Securities beverages analyst Trevor Sterling said, highlighting the double-digit growth in those three countries.
Brazil, where Heineken expanded to become the country's second biggest brewer in 2017, is now the largest market for the Heineken brand.
Analysts' average estimate is for 6% profit growth this year, according to a company-compiled consensus. Chief financial officer Laurence Debroux declined to put a numerical range on Heineken's forecast.
The guidance is the same as that given by Heineken a year ago. However, the company tempered profit hopes in October, saying operating profit would rise by only 4%.
The final figure for 2019 before one-offs was €4.02 billion, a 3.9% rise and exactly in line with the market consensus.
On a regional basis, profit figures were also similar to expectations, with a slight outperformance in Africa, the Middle East and Eastern Europe and the Americas against slight underperformance in Asia Pacific and Europe.