Heineken has reported strong earnings in the first half of the year, with their sales and on-trade revenue vastly increasing in Europe.
According to market analysts Jefferies Equity Research, Heineken, which owns beer brands like Amstel, Fosters and Birra Morretti, beat sales expectations and made a profit between July-August, more than the same period last year, up by 7.6% and 24.3%, respectively.
While the company acknowledges the risk of weaker consumer spending due to the cost-of-living squeeze, the current low unemployment rate is helping to mitigate disposable income pressure.
The summer was reportedly a very profitable season for pubs and restaurants in Europe, and Jefferies expects to see this growth continue into the winter with the FIFA World Cup beginning in November.
The market analysts also said that Heineken are at “an early stage in a multi-year transformation,” and “we expect a greater appreciation of Heineken’s potential earnings power, which offers duration over and above the recovery.”
A spokesperson for Jefferies added: “What is more compelling to us, beyond the recovery, is that Heineken is a growth business undergoing change at the start of a multi-year cost-consciousness journey.
“Whilst it takes time to change a culture and train new muscle, we see good progress here and a commitment within the business to make this institutional. We expect the company to provide an update on the cost agenda with the CMD in December.”
