Heineken to 'Streamline' Offices as It Prepares for Volatility Ahead -- Update
--Heineken aims to reshape company in strategic review
--The company warned of continuing uncertainty as new
coronavirus wave hits Europe
--Third-quarter beer volumes beat expectations despite weakness
By Adria Calatayud
Heineken NV said Wednesday that it will "streamline" its head
office and regional offices to cut costs as it prepares for an
extended period of volatility and uncertainty due to the
The Dutch brewer--which also owns the Sol, Birra Moretti and
Tiger beer brands--said the changes are part of a strategic review
that aims to reshape the company. Chief Executive Dolf van den
Brink, who replaced longtime Heineken boss Jean-Francois van
Boxmeer in June, said he wants Heineken to emerge stronger from the
The world's second-largest brewer said it is exploring how to
accelerate and expand its sources of growth while simplifying and
right-sizing its cost base. Separately on Wednesday, the company
said it will buy cider brand Strongbow from Asahi Group Holdings
Ltd. in Australia, and gain perpetual licenses on beer brands
Stella Artois and Beck's in Australia.
As a result of its office simplification, Heineken expects a
reduction of around 20% in related personal costs. Implementation
will begin in the first quarter of 2021, as the company had
committed to not launching restructurings related to Covid-19 in
Despite a partial recovery over the summer, Heineken warned of
continuing uncertainty due to a second wave of coronavirus
infections in Europe, and said recurring lockdowns and the lack of
international tourism in Asia-Pacific hurt its third-quarter
performance in a key growth engine.
"The situation remains highly volatile and uncertain. We expect
rolling outbreaks of Covid-19 to continue to meaningfully impact
many of our markets in addition to rising recessionary pressures,"
Mr. Van den Brink said.
Shares at 0910 GMT were down EUR2.76, or 3.5%, at EUR77.28.
For the first nine months of 2020, Heineken made a net profit of
396 million euros ($467.9 million), down from EUR1.67 billion a
In the third quarter, organic consolidated beer volume fell
1.9%, against consensus expectations of a 5.9% decline. Heineken's
volumes were better than analysts had expected in Western Europe,
the Americas, and Africa, the Middle East and Eastern Europe, but
weaker than anticipated in Asia-Pacific.
In the U.S., Heineken said beer volumes returned to organic
growth in the quarter as distributors replenished inventories and
sales through bars and restaurants showed some signs of
However, the company said the pandemic is having a significant
impact on its markets and wider business. Continued volatility is
expected for the fourth quarter, as many of its markets experience
additional waves and fresh restrictions, including bar and
restaurant closures, Heineken said.
Analysts currently expect Heineken to post a 7.7% decline in
organic beer volumes for the full year. For the first nine months
of the year, the company's organic beer volumes fell 8.1%,
following a 12% drop for the first half.
Heineken didn't provide specific guidance for 2020, having
withdrawn all guidance in April, but said product and channel mix
is anticipated to continue to hurt its results, especially in
Europe, and that input costs will be higher than last year.
Mitigation actions will continue for the remainder of 2020, as
the company reduces all discretionary expenses in an attempt to
offset the hit from the pandemic. However, Heineken said the
benefits of these actions will be lower in the fourth quarter as
second-half costs were skewed toward the third quarter.
Write to Adria Calatayud at firstname.lastname@example.org
(END) Dow Jones Newswires
October 28, 2020 05:51 ET (09:51 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.