Heineken Expecting Profit to Increase by a Single Digit This Year

Dutch based and world’s number two beer manufacturer Heineken H.V (AMS: HEIN) said that it’s very much hopeful their profits will rise by a single digit in the year 2020. Heineken says the increase will be due to decreasing price of barley and lower cost of aluminum.

The company says since last year there seems to be a change in consumer preference as many consumers are shifting to relatively expensive beers. Pairing this with a moderate increase in input costs makes Heineken confident that profits will rise this year.

Analysts have estimated a 6% profit growth for the company this year however during an interview, Heineken’s Chief Financial Officer Laurence Debroux refused to put a figure on expected company’s profit growth this year.

Due to outbreak of deadly coronavirus in the world’s second largest economy China, which by far, is affecting operations of many multinationals, Heineken says it has not yet accessed the impact the virus could pose to their business.

“We are cautious, we are just looking at the situation, but for sure it is not paralyzing, that would be too big a word, but it will have some consequences,” said Heineken’s CEO, Jean-Francois.

The CEO has headed the company for a decade and half but he is expected to step down mid this year.

In 2019 Heineken generated revenue of $4.39 billion (4.02 billion euros) signifying a 3.9% rise compared to the revenue generated by the company in 2018.

The company recorded better than expected performances in Middle East, Africa, Americas and Eastern Europe. Nonetheless, the Europe and Asia Pacific posted lower than expected performances last year.

Generally, Asia posted the highest profit growth, the company attributed this to Vietnam which is the second most profitable market for Heineken after Mexico.