Big Brewers Face Different Pandemic Hangovers -- Heard on the Street
February 10 2021 - 8:14AM
Dow Jones News
By Carol Ryan
Global brewers are recovering from the pandemic at unequal
speeds.
On Wednesday, Heineken said it sold 8% less beer in the three
months through December compared with the same period of 2019.
After better-than-expected sales over the summer, fresh lockdowns
in key markets such as the U.K. set the world's second-largest
brewer back again in the fourth quarter. Heineken estimates that
less than 30% of bars and restaurants in Europe are currently
open.
Its outlook for this year is cloudy. Although nightlife venues
may begin to reopen in a few months, bars won't be selling beer at
normal volumes while social-distancing measures remain in place.
That will weigh on Heineken's sales, around one-third of which
typically come from eating and drinking venues outside the home.
The brewer doesn't expect operating margins to get back to
pre-pandemic levels until 2023.
Its guidance for a grinding three-year profit recovery is at
odds with what is happening at smaller rival Carlsberg. The Danish
brewer, which reported full-year numbers last week, actually
managed to grow its operating margins in 2020 compared with the
previous year. After seeing the impact of the virus in China, its
biggest market, Carlsberg didn't delay in taking costs out of the
business. Heineken is only now beginning a major drive to reduce
its overheads by around EUR2 billion, equivalent to $2.4
billion.
Anheuser-Busch InBev doesn't report its 2020 numbers until later
this month. However, Barclays analyst Laurence Whyatt thinks the
Budweiser owner will make slow progress between now and 2025. "We
don't expect them to get back to their 2019 margins within our
forecasting period.... We are concerned about their pricing power,"
he said.
The patchy recovery can partly be explained by location. AB
InBev and Heineken have high exposure to emerging markets like
Brazil, where currencies have been especially volatile and the path
to vaccination against Covid-19 is less clear. Carlsberg's stock is
trading at 21 times projected earnings, compared with 25 times for
Heineken. For investors, this could be a time when the cheaper beer
is better quality.
Write to Carol Ryan at carol.ryan@wsj.com
(END) Dow Jones Newswires
February 10, 2021 07:59 ET (12:59 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
Heineken Nv (QX) (USOTC:HEINY)
Historical Stock Chart
From Apr 2024 to May 2024
Heineken Nv (QX) (USOTC:HEINY)
Historical Stock Chart
From May 2023 to May 2024