Heineken has posted higher-than-expected first-half earnings, as consumers bought more beer despite inflationary pressures, but the world's second-largest brewer shelved its margin target for 2023 as costs spiked.
The brewer of Heineken, Europe's top-selling lager, Tiger, Sol and Strongbow cider, said operating profit before one-offs rose by 24.6% to €2.16 billion, against the consensus of a 17% increase in a company-compiled poll.
Heineken previously set a target to raise its operating margin to 17% in 2023, but it cast doubts in February on achieving that due to increased economic uncertainty and sharply higher input costs.
The market expectation before Monday's results was a margin of 16% next year, the same level as achieved in the first half of 2022.
"Our business performed well in the first half of 2022," said Dolf van den Brink, chief executive. "We grew ahead of the industry in more than half of our markets and the Heineken brand again showed strong momentum, boosted by stepped up brand support.
"Our actions on pricing, revenue management and productivity offset significant inflationary pressures in our cost base. As a result, operating profit is now firmly ahead of 2019."
Margin Outlook 'Stable'
Heineken also repeated its outlook that its margin would be stable or increase modestly this year. For 2023, it said its objective now was for a mid- to high-single-digit percentage increase in operating profit itself.
For the first half, Heineken reported a 7.6% rise in beer volume, with an acceleration in the second quarter and expansion in all regions, notably Asia-Pacific recovering from COVID-19 lockdowns, and solid Americas and Europe, where more consumers were drinking at bars or restaurants.
Heineken, as with market leader Anheuser-Busch InBev, said it benefited from price hikes and consumers shifting to more expensive "premium" beers, such as the Heineken brand in major markets Brazil, China and Vietnam. Heineken recently expanded its presence in Mexico.