Heineken cuts costs as beer sales slide 14 per cent
Heineken has reported a 14 per cent drop in beer sales in March, and predicts the situation will worsen in the months to come.
The brewer has suffered sharp declines in all regions as coronavirus restrictions close pubs and restaurants. In South Africa Heineken was forced to shut down production entirely.
With pubs closed, Heineken said its focus was on replenishing store shelves and helping deliveries. As a result, it is accelerating business-to-consumer initiatives to “capture the growth of e-commerce channels.”
First quarter net profit fell 68 per cent to €94m (£82m). Beer volumes fell 2.1 per cent while overall volumes, including cider and soft drinks, fell 3.9 per cent.
Heineken expects the impact of the coronavirus crisis to worsen in the second quarter of 2020. It also expects a hit in the second half of the year, as the impact on the economy is likely to endure even when lockdowns are lifted.
The company has already secured additional financing on the debt capital market. It placed €1.4bn (£1.23bn) of five- and 10-year notes in late March.
Read more: Heineken predicts 2020 profits will fizz
Cost-cutting measures
In a statement today, Heineken said it was reducing all discretionary expenses by suspending corporate events and hiring, and pausing or scaling down projects and technology upgrades. The firm has suspended all non-committed Capex.
Bonuses for senior managers, including the executive board and the executive team, will be cancelled in 2020.
The firm confirmed it will pay its planned final dividend for 2019. However it will not provide an interim dividend after its interim results in August.
Get the news as it happens by following Morning Wire on Twitter.