Profits fall 15% at Heineken as Punch Taverns deal given go-ahead
Heineken has found itself on the sharp end of currency depreciation and global financial headwinds.
In its full year results released this morning, the Dutch brewer revealed a double-digit fall in pre-tax profits and said it is expecting more volatility in 2017 thanks to “significant currency pressures” both in the UK and abroad.
As well as currency fluctuations taking their toll, Heineken is also moving ahead with the Punch Taverns takeover, which will facilitate the transfer of keys of 1,900 pubs across the country.
On February 10, Punch Shareholders voted in favour of the £402.7m deal, which is expected to become be finalised by the end of June.
Jean-François van Boxmeer, Heineken chief executive, pointed to “major unforeseen macroeconomic and political developments” contributing to the fall of pre-tax profits from £2.4bn in 2015 to £2.1bn last year.
But while profits were down, revenues increased by 1.4% overall.
While beer volume declined slightly in the UK, volume sales of premium beer performed strongly, resulting in double-digit growth.
Cider also gained market share driven by the success of Old Mout and Strongbow variations Dark Fruit and Cloudy Apple.
The Punch Taverns deal is the second of two major acquisitions lined up in 2017, as Heineken attempts to compete with market leader Anheuser-Busch InBev, which took over SABMiller for £79bn last year.
The other is with Japanese brewer Kirin, who agreed to sell its Brazilian beer business to Heineken for ¥77bn (£556 million) earlier this week.
Heineken sought to push further into the UK last year by partnering with Deliveroo to fulfill direct-to-consumer orders.
In November, the spirits giant paired up with the delivery start-up, using their network of Roomen and Roowomen to deliver straight to customers’ doors.
Despite preparing for further negative currency impact in 2017, the company said it is expecting further organic revenue and profit growth.