Heineken Warns Weak Emerging Market Currencies to Cut Profit

(Bloomberg) -- Heineken NV, the world’s second-largest brewer, warned that weak emerging-market currencies may aggravate the effect of lower beer consumption this year as the coronavirus pandemic ravages the beer industry.

• Beer volume fell 14% on an organic basis in March, though the 2.1% decline in the first quarter was slightly better than analysts expected. The second quarter will be worse, Heineken said.

Key Insights

• Heineken laid out the risks for this year, having abandoned its 2020 forecast previously. The brewer said it expects possible credit losses from customers and may run into problems as small suppliers struggle to keep their businesses operating. Heineken also flagged the risk of impairments and non-effective hedge contracts.
• These are the last results before the full toll of the closure of bars and restaurants globally is reflected in Heineken’s numbers. The drop in demand is expected to be much worse in the second quarter, and the final half of the year will be marked by economic weakness.
• Heineken’s outlook sets a bearish tone for rivals Anheuser-Busch InBev NV and Carlsberg A/S, which report results in coming weeks.

Market Action

• The stock was little changed in early Amsterdam trading. The shares have gained 2.6% in the past month.

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