BRUSSELS (Reuters) – Heineken cast doubt on its medium-term profit margin target on Wednesday amid uncertainty over the impact of inflation, after announcing better-than-expected 2021 results on the back of a rising prices and savings.
For 2022, the world’s second-largest beer maker has warned that the COVID-19 pandemic will further affect its bottom line and that the impact of inflation and supply chain pressures will be significant.
The brewer has indicated that it will pass on the increase in the cost of inputs to its prices but that this could weigh on beer consumption.
“This kind of price increases and inflation, I think we haven’t seen in a generation,” chief executive Dolf van den Brink told Reuters. “The big unknown is how this will affect more developed markets that haven’t seen this kind of price before.”
The group expects stability or a modest increase in its operating margin for 2022, which reached 15.6% last year.
Dolf van den Brink said the group was confident for the forecast for the rest of the year but was less certain for 2023.
Heineken is targeting an operating margin of 17% next year, but there are “growing uncertainties” about inflation and its impact on consumer spending, he said. The group says it will update its forecast for 2023 later this year.
In 2021, Heineken saw its beer sales increase by 4.6% compared to 2020. Price increases and customer appetite for more expensive beers helped increase net sales by 12, 2%.
The group’s operating profit increased by 43.8% like-for-like, reaching 3.41 billion euros, beyond the consensus forecast of 3.30 billion euros provided by Heineken.
On the Amsterdam Stock Exchange, the Heineken share rose by more than 1% in the morning.
(Report Philip Blenkinsop, French version Lou Phily, edited by Blandine Hénault)
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