Heineken's profit beats forecast after 3,000 job cuts
Heineken's Restructuring and Financial Performance
LONDON, Aug 5 (Reuters) - Heineken beat first-half profit forecasts on Wednesday after cutting about 3,000 jobs, roughly half of the up to 6,000 reductions targeted under a two-year restructuring plan.
Background on Job Cuts
Former CEO Dolf van den Brink announced the cuts in February as the world's second-largest brewer sought to tackle weak beer demand across the industry.
Progress on Restructuring Plan
Heineken, which makes Tiger and Sol beer alongside its namesake lager, said it had made material progress on the plan, helping widen its operating margin.
Details of Job Reductions
Chief Financial Officer Harold van den Broek said the cuts were "enterprise-wide" and resulted from initiatives across breweries, the supply chain, head office and individual markets, with Europe a "big component".
"It will be no surprise that the more we're going through this process, the more opportunities we're also trying to uncover," van den Broek told journalists, adding Heineken was open-minded about further cuts.
Financial Results and Market Reaction
Heineken's organic operating profit rose 6.7% in the first half, beating analysts' expectations for 3.3% growth. Its shares, which have fallen behind those of top brewer Anheuser-Busch InBev, rose 2.5% in early trade.
Cuts Help Offset Other Problems
CUTS HELP OFFSET OTHER PROBLEMS
Barclays analyst Laurence Whyatt said Heineken's swift cost-cutting had boosted confidence in its performance despite weakness in key markets in the Americas, where it lost market share.
Efficiency Measures and Cost Outlook
Van den Broek said the job cuts and other efficiency measures, which are expected to deliver gross savings at the upper end of a €400 to €500 million target, had helped Heineken maintain its costs outlook despite rising pressures. Those pressures stemmed mainly from the Iran war, as well as factors such as the impact of European heatwaves on transport.
Costs were likely to edge higher in 2027 because of the conflict, he said, adding that the situation in the Middle East remained highly uncertain and concerning.
Leadership Changes and Future Outlook
Heineken appointed Rafael Oliveira in June to succeed van den Brink, who resigned unexpectedly in January after six years as CEO. Oliveira is due to take over in October.
Expectations for New CEO
Alongside completing Heineken's restructuring, investors are looking to Oliveira to boost sales volumes and catch up with key rival Anheuser-Busch InBev in areas such as efficiencies and shareholder returns.
(Reporting by Emma Rumney. Editing by Muralikumar Anantharaman and Mark Potter)
