Financial Data and Key Metrics Changes - The company reported a net revenue growth of 14.1% organically, amounting to €1.3 billion, driven by strong volume growth and revenue per hectolitre growth [15][43] - Beer volume grew by 9.6%, with Heineken brand volume increasing by 19.6% [15][32] - Operating profit more than doubled, reaching €1.6 billion, with a margin of 16.3% [15][54] - Net profit tripled compared to the previous year, with EPS growing to €1.56 per share, although still 15% below 2019 levels [64][65] Performance by Business Lines - In the AMEE region, net revenue grew organically by 30.4%, and operating profit increased by 190.2%, with strong growth in South Africa and Nigeria [17] - The Americas saw net revenue and operating profit grow by 25.7% and 85.7% respectively, driven by Mexico and Brazil [19] - Asia Pacific experienced a beer volume decline of 1% organically, with net revenue increasing by 5.4% [23] - Europe reported a net revenue growth of 3%, with a beer volume decline of 9.7% in Q1, but a recovery to 13% growth in Q2 [29] Market Data and Key Metrics Changes - In Nigeria, beer volume grew 16.8% organically, with a premium portfolio growth close to 60% [18] - Mexico's beer volume fully recovered with growth in the mid-30s, while Brazil's price mix grew in the high 20s [20][21] - In Europe, on-trade volume was down by a low single digit for the first half, with off-trade growing ahead of 2019 [30][31] Company Strategy and Industry Competition - The company launched the EverGreen strategy aimed at delivering superior and profitable growth while navigating the ongoing pandemic [7][10] - The acquisition of United Breweries in India is seen as a significant opportunity for long-term growth, leveraging the large population and low per capita beer consumption [27][28] - The company is focusing on premiumization and expanding its portfolio, with new product launches in various markets [12][32] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the ongoing impact of COVID-19 and rising commodity costs, expecting full-year financial results to remain below 2019 levels [16][73] - The company anticipates margin pressure to intensify in the second half of the year due to input cost inflation [73] - Despite uncertainties, management is confident in the progress made towards the EverGreen strategy and the commitment of its workforce [75] Other Important Information - The company reported a significant currency translation impact of €567 million, decreasing net revenue by 6.1% [47] - The organizational redesign has been largely completed, with a target of delivering €2 billion in gross savings by 2023 [58][59] - Free operating cash flow improved to €650 million, a significant increase from the previous year [68] Q&A Session Summary Question: Early signs of EverGreen strategy evolution - Management highlighted the need for consumer-centric innovation and the positive momentum in brand Heineken's growth [80] Question: Confidence in delivering €2 billion cost savings - Management expressed confidence in the progress made and the programmatic approach to cost savings [88] Question: Excitement about India integration - Management is optimistic about the long-term growth potential in India, citing favorable demographics and the strength of the Kingfisher brand [82][84] Question: Input cost headwinds outlook - Management indicated that input costs have risen significantly and expect pressures to continue into the second half of the year [106] Question: Recovery of the on-premise channel in Europe - Management noted a slower recovery in Europe compared to the U.S., with ongoing uncertainties regarding the full return of on-trade volumes [100] Question: Clarification on €1 billion savings - Management clarified that the €1 billion savings is an annualized figure, not a gross number for 2021 [103]
Heineken(HEINY) - 2021 Q2 - Earnings Call Transcript