Heineken cast doubt on its mid-term profit margin target due to the significant impact of inflation, after reporting stronger than expected earnings in 2021 from higher prices and cost savings.
The world's second largest brewer said that it expects the COVID-19 pandemic will still affect 2022 revenues and the impact from inflation and supply chain pressures would be significant.
'Overall we expect a stable to modest sequential improvement in operating profit (beia) in 2022,' the company said in a statement, referring to figures before exceptional items and amortisation.
The maker of Europe's top-selling lager Heineken, Tiger, Sol and Strongbow cider said that it still aimed for an operating profit margin of 17% in 2023, but that there was "increased uncertainty" given the economic environment and rising input costs.
It said it would update its 2023 guidance later in the year.
The Dutch brewer sold 4.6% more beer in 2021 than in 2020, with increases in all regions except Asia, and price increases and a shift to more expensive beers driving net revenue up 12.2%.
Recovery To Pre-Pandemic Levels
"We made a big step towards recovering to pre-pandemic levels, and in parts going beyond," commented Dolf van den Brink, Heineken chief executive.
"I am pleased with the great momentum of the Heineken brand, the renewal of our brand and product portfolio, the acceleration of our digital transformation and how we are strengthening our footprint with the acquisition of UBL in India and our announced intentions for Southern Africa."
The company's operating profit rose 43.8% higher on a like-for-like basis to €3.41 billion, above the company-compiled consensus for €3.30 billion. Heineken had previously said its 2021 results would be below those of pre-pandemic 2019.
Heineken said it had now achieved €1.3 billion of an overall €2 billion saving plan – part of its broader EverGreen strategy – that involves shedding 8,000 jobs.
"Looking ahead, although the speed of recovery remains uncertain and we face significant inflationary challenges, we are encouraged by the strong performance of our business and how EverGreen is taking shape," van den Brink added. "This gives me confidence we are on course to deliver superior and balanced growth to drive sustainable long-term value creation."