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Heineken Shows Positive Growth for 2019

Brewer's growth came primarily from emerging markets

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Holmes Osborne, CFA
Feb 19, 2020
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Heineken NV (

XAMS:HEIA, Financial) (HEINY, Financial) has had another great year of growth, driven by emerging markets.

At 102.8 euros ($111.12), the stock trades at a pretty reasonable price. There are 570 million shares and the market cap is 58.6 billion euros. Diluted earnings were 4.38 euros per share, an increase of 5.5%. The stock trades at a price-earnings ratio of 23.5. The dividend is 1.68 euros, so the dividend yield is 1.63%. The dividend was 1.60 euros last year, so that’s an increase of 5%.


Organic net revenue increased 5.6% and beer volume was up 3.1%. Operating profit was up 3.9% and operating margins were 16.85%. Revenue was 23.9 billion euros. Free cash flow was 2.2 billion euros.

In the Americas, beer volume was up 2.2%. Growth came from Mexico and Brazil. Premium brands such as Amstel and Devassa did well in Brazil. In the U.S., Heinken’s sales dropped slightly.

In Asia, beer volumes grew a whopping 11.8%, driven by Vietnam, Cambodia, Myanmar, Korea and Japan. Popular brands in Asia include Tiger, Larue and Heineken. Vietnam has put up some fantastic growth and Heineken has concentrated a lot of efforts there. Heineken’s overall market share has since risen to 31%, up from 20% in 2013. Heineken Silver is a local offering that is less bitter than the Heineken we Americans know and has 4% alcohol instead of 5%.

Growth in Europe and England was mediocre and at a slight loss of 20 basis points. It looks like Heineken will continue to concentrate on developing markets.

As you might expect, currencies affect revenue and sales. Currencies had a positive effect of 1.2%, or 278 million euros. The Mexican peso, the Vietnamese dong and the U.S. dollar were strong. The Brazilian real and the Haitian gourde were weak.

I keep seeing these commercials for Heinken Zero, a non-alcoholic brand. Of course I’ll never drink such a thing, so I have to rely upon financial reports for information. Sales of non-alcoholic beers grew from 346.06 million gallons to 372.4 million gallons last year. I guess people drink the stuff, so I shouldn’t criticize it.

Jean-François van Boxmeer will step down after 15 years and hand the reins over to Dolf van den Brink. Van der Brink has been head of the company’s Asian division. You can see where the emphasis is on growth.

When investing in Heineken, there are two ways. The first is the normal stock. The second is Heineken Holding (

XAMS:HEIO, Financial). Heineken Holding trades at a big discount—the stock trades at 91.2 euros, which is 11.2% off. You receive a 1.84% dividend yield instead of 1.63%.

It adds up. We’ve owned Heineken Holding since 2012 and are at a 137% profit. With the dividends, we’re up about 145%. The one big drawback to owning a Dutch company is that you have to cede back part of the dividend to the government, even inside of an individual retirement account. It’s 15%.

The founding family owns shares of Heineken Holding. Several years ago, Mexico-based Femsa swapped out its beer portfolio for a 12.262% ownership stake. The many Mexican beers that you see at the supermarket are owned by Heinken, such as Sol and Tecate.

Morningstar has a fair value estimate at 88 euros, which I think is a little stingy. They note, “Our new valuation implies 2020 valuation multiples of 21 times earnings and 11 times EV/EBITDA, a free cash flow yield of 4%, and a dividend yield of 2%.”

So is the stock a buy at current prices? Holding may be. Take every metric of Heineken’s stock and decrease it by 11.2%. You’re getting a growth company for only a price-earnings ratio of 20.8. The current price-earnings ratio on the Dow Jones is 23, so Heineken Holding looks cheap on that metric.

Disclosure: We own shares.

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